UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               -------------------
                                    FORM 10-K


[X]         Annual  Report  Pursuant  to Section  13 or 15(d) of the  Securities
            Exchange Act of 1934 For the fiscal year ended December 31, 2000.

[  ]        Transition Report Pursuant to Section 13 or 15(d) of the Securities
            Exchange Act of 1934
            For the transition period from              to

                         Commission file number 1-10813
                             -----------------------

                          PLM EQUIPMENT GROWTH FUND III
             (Exact name of registrant as specified in its charter)

                   California                                   68-0146197
         (State or other jurisdiction of                     (I.R.S. Employer
         incorporation or organization)                     Identification No.)

        One Market, Steuart Street Tower
          Suite 800, San Francisco, CA                          94105-1301
              (Address of principal                             (Zip code)
               executive offices)

        Registrant's telephone number, including area code (415) 974-1399

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. Yes X No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) 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]

Aggregate market value of voting stock: N/A

Indicate  the number of units  outstanding  of each of the  issuer's  classes of
depositary units, as of the latest practicable date:

                  CLASS                            OUTSTANDING AT MARCH 12, 2001
                  -----                            -----------------------------
   Limited partnership depositary units:                         9,871,073
   General Partnership units:                                            1

An index of  exhibits  filed with this Form 10-K is  located  at page 22.
Total number of pages in this report: __.




                                     PART I


ITEM 1.    BUSINESS

(A) Background

In October 1987, PLM Financial  Services,  Inc. (FSI or the General Partner),  a
wholly-owned subsidiary of PLM International,  Inc. (PLM International or PLMI),
filed a  Registration  Statement  on Form S-1 with the  Securities  and Exchange
Commission with respect to a proposed  offering of 10,000,000  depositary  units
(the units) in PLM Equipment Growth Fund III, a California  limited  partnership
(the Partnership, the Registrant, or EGF III). The Partnership's offering became
effective on March 21, 1988. FSI, as General Partner,  owns a 5% interest in the
Partnership. The Partnership engages in the business of investing in diversified
equipment portfolio consisting primarily of used,  long-lived,  low-obsolescence
capital equipment that is easily transportable by and among prospective users.

The Partnership's primary objectives are:

     (1) to maintain a diversified  portfolio of  long-lived,  low-obsolescence,
high  residual-value  equipment with the net proceeds of the initial partnership
offering,  supplemented by debt financing and  reinvestment of cash generated by
operations.  All  transactions  of over $1.0 million must be approved by the PLM
International  Credit  Review  Committee  (the  Committee),  which is made up of
members  of PLM  International  Senior  Management.  In  determining  a lessee's
creditworthiness,   the  Committee  will  consider,  among  other  factors,  its
financial  statements,  internal and  external  credit  ratings,  and letters of
credit.

     (2) to generate sufficient net operating cash flow from lease operations to
meet liquidity  requirements  and to generate cash  distributions to the limited
partners  until  such  time  as  the  General  Partner   commences  the  orderly
liquidation of the  Partnership  assets or unless the  Partnership is terminated
earlier upon sale of all Partnership property or by certain other events;

     (3) to selectively  sell equipment when the General Partner  believes that,
due to market conditions,  market prices for equipment exceed inherent equipment
values or that expected future benefits from continued ownership of a particular
asset will have an adverse affect on the  Partnership.  As the Partnership is in
the  liquidation  phase,  proceeds  from these sales,  together  with excess net
operating cash flows from operations (net cash provided by operating  activities
plus distributions from unconsolidated  special-purpose  entities (USPEs)),  are
used to pay distributions to the partners.

     (4) To  preserve  and protect the value of the  portfolio  through  quality
management, maintaining diversity, and constantly monitoring equipment markets.

The offering of the units of the Partnership closed on May 11, 1989. The General
Partner contributed $100 for its 5% general partner interest in the Partnership.
On August 16, 1991, the units of the  Partnership  began trading on the American
Stock Exchange (AMEX).  Thereupon each unitholder  received a depositary receipt
representing  ownership  of the number of units  owned by such  unitholder.  The
General Partner  delisted the  Partnership's  depositary  units from the AMEX on
April 8, 1996. The last day for trading on the AMEX was March 22, 1996.

As of December 31, 2000, there were 9,871,073 depositary units outstanding.

Beginning in the eleventh year of operations of the Partnership, which commenced
on January 1, 2000, the General  Partner began the  dissolution  and liquidation
the assets of the Partnership in an orderly fashion. The General Partner filed a
certificate of dissolution  on behalf of the  Partnership  with the Secretary of
State for the State of California on December 22, 2000, and following completion
of the liquidation of the Partnership which is anticipated to occur in 2001, the
General Partner will file a certificate of cancellation.


Table  1,  below,  lists  the  equipment  and the cost of the  equipment  in the
Partnership's  portfolio,  and the cost of assets held for sale,  as of December
31, 2000 (in thousands of dollars):

<TABLE>
<CAPTION>
                                     TABLE 1

 UNITS                   TYPE                                      MANUFACTURER                COST
----------------------------------------------------------------------------------------------------

Owned equipment held for operating leases:
<S> <C>         <C>                                                   <C>                     <C>
    721         Non-pressurized tank railcars                         Various              $  17,403
    456         Pressurized tank railcars                             Various                 11,180
    119         Coal railcars                                         Various                  4,788
    168         Marine containers                                     Various                  3,230
    186         Intermodal trailers                                   Various                  3,427
                                                                                         --------------

                        Total owned equipment held for operating leases                    $  40,028
                                                                                         ==============
</TABLE>

<TABLE>
<CAPTION>
Owned equipment held for sale:
<S>   <C>       <C>                                                   <C>                  <C>
      1         Dash 8-300 Stage II commuter aircraft                 Dehavilland          $   5,748
      1         737-200 Stage II commercial aircraft                  Boeing                  16,096
                                                                                         --------------

                        Total owned equipment held for sale                                $  21,844
                                                                                         ==============

                        Total owned equipment                                              $  61,872(1)
                                                                                         ==============
----------
<FN>
(1) Includes equipment  purchased with the proceeds from capital  contributions,
undistributed cash flow from operations,  and Partnership  borrowings.  Includes
costs  capitalized  subsequent  to  the  date  of  acquisition,   and  equipment
acquisition fees paid to PLM Transportation Equipment Corporation. All equipment
was used equipment at the time of purchase,  except for 50 marine containers and
164 dry piggyback trailers.
</FN>
</TABLE>

The Partnership's aircraft is generally leased under operating leases with terms
of eight years. The  Partnership's  marine containers are leased to operators of
utilization-type  leasing pools,  which include  equipment owned by unaffiliated
parties.  In such instances,  revenues received by the Partnership  consist of a
specified  percentage of revenues  generated by leasing the pooled  equipment to
sublessees,  after  deducting  certain direct  operating  expenses of the pooled
equipment.  Rents for  railcars  are based on fixed  rates  with terms of two to
seven years.  Lease revenues for trailers that operated in rental yards owned by
PLM Rental, Inc. were based on a fixed rate for a specific period of time.

Rental  income  related to trailers is  reported as revenue in  accordance  with
Financial  Accounting  Standards Board Statement No.13  "Accounting For Leases".
Direct  expenses  associated  with the  equipment  are  charged  directly to the
Partnership.

The  lessees  of the  equipment  include : Time Air,  Canadian  Pacific  Railway
Corporation and Terra Nitrogen.

(B) Management of Partnership Equipment

The  Partnership  has entered into an equipment  management  agreement  with PLM
Investment  Management,  Inc.  (IMI), a wholly-owned  subsidiary of FSI, for the
management  of  the  Partnership's   equipment.   The  Partnership's  management
agreement with IMI is to co-terminate  with the dissolution of the  Partnership,
unless the limited  partners vote to terminate the agreement  prior to that date
or at the  discretion  of the  General  Partner.  IMI has agreed to perform  all
services  necessary to manage the equipment on behalf of the  Partnership and to
perform or contract for the  performance of all  obligations of the lessor under
the Partnership's  leases. In consideration for its services and pursuant to the
Partnership agreement,  IMI is entitled to a monthly management fee (see Notes 1
and 2 to the audited financial statements).

(C) Competition

(1) Operating Leases versus Full Payout Leases

The  equipment  owned or  invested  in by the  Partnership  is leased  out on an
operating   lease  basis   wherein  the  rents   received   during  the  initial
noncancelable  term of the lease are  insufficient to recover the  Partnership's
purchase  price of the  equipment.  The short to  mid-term  nature of  operating
leases  commands a higher rental rate than  longer-term,  full payout leases and
offers lessees relative flexibility in their equipment commitment.  In addition,
the rental  obligation  under an operating  lease need not be capitalized on the
lessee's balance sheet.

The Partnership  encounters  considerable  competition from lessors that utilize
full payout leases on new  equipment,  i.e.  leases that have terms equal to the
expected  economic  life  of  the  equipment.  While  some  lessees  prefer  the
flexibility offered by a shorter-term  operating lease, other lessees prefer the
rate  advantages  possible with a full payout lease.  Competitors may write full
payout  leases  at  considerably  lower  rates  and for  longer  terms  than the
Partnership offers, or larger competitors with a lower cost of capital may offer
operating leases at lower rates,  which may put the Partnership at a competitive
disadvantage.

(2) Manufacturers and Equipment Lessors

The Partnership competes with equipment manufacturers who offer operating leases
and full payout leases.  Manufacturers may provide  ancillary  services that the
Partnership  cannot offer, such as specialized  maintenance  service  (including
possible substitution of equipment),  training,  warranty services, and trade-in
privileges.

The  Partnership  also  competes  with many  equipment  lessors,  including  ACF
Industries, Inc. (Shippers Car Line Division), General Electric Railcar Services
Corporation,  and  other  investment  programs  that  lease  the  same  types of
equipment.

(D)  Demand

The Partnership currently operates in four primary operating segments:  aircraft
leasing,  marine  container  leasing,  railcar leasing,  and intermodal  trailer
leasing.  Each  equipment  leasing  segment  engages in  short-term  to mid-term
operating leases to a variety of customers.  Except for those aircraft leased to
passenger air carriers, the Partnership's  equipment and investments are used to
transport materials and commodities, rather than people.

The following  section describes the international and national markets in which
the Partnership's capital equipment operates:

(1) Aircraft

(a) Commercial aircraft

Both Boeing and Airbus  Industries have predicted that the rate of growth in the
demand for air transportation services will be relatively robust for the next 20
years.  Boeing has predicted that the demand for passenger services will grow at
an average  rate of about 4.8% per year and the  demand for cargo  traffic  will
grow at about 6.4% per year during  that  period.  Such  growth  will  require a
substantial increase in the numbers of commercial aircraft. According to Boeing,
as of the end of 1999,  the  world  fleet  of jet  powered  commercial  aircraft
included a total of about 13,670 airplanes. That total included 11,994 passenger
aircraft with 50 seats or more and 1,676  freighter  aircraft.  Boeing  predicts
that by the end of 2019 that fleet will grow to about 31,755 aircraft  including
28,558 passenger aircraft with 50 seats or more and 3,197 freighter aircraft. To
support this growth,  Boeing  received 502 new aircraft  orders in the first ten
months of 2000 and Airbus received 427.

Airline economics will also require aircraft to be retained in active commercial
service for longer periods than previously  expected.  Consequently,  the market
for environmentally acceptable and economically viable aircraft will continue to
be robust and such aircraft will command  relatively  high residual  values.  In
general,  aircraft values have tended to grow at about 3% per year.  Lease rates
should also grow at similar rates.  However, such rates are subject to variation
depending  on the state of the world  economy and the  resultant  demand for air
transportation  services.  The Partnership  the commercial  aircraft was sold on
February of 2001 for $2.3 million.

(b) Commuter aircraft

Regional jets have been well received in the commuter market.  This has resulted
in an  increase  in demand  for  regional  jets at the  expense  of  turboprops.
Turboprop  manufacturers  are cutting  back on  production  due to this  reduced
demand.  The  uncertainty  of the future  market for  turboprops  has an adverse
effect on turboprop lease rates and residual values.

The Partnership leases one commuter turboprop containing 50 seats. This aircraft
flies in North America,  which  continues to be the  fastest-growing  market for
commuter  aircraft  in the world.  The  Partnership's  aircraft  possess  unique
performance  capabilities,  compared  to other  turboprops,  which allow them to
readily  operate at maximum  payloads  from  unimproved  surfaces,  hot and high
runways, and short runways.

The Partnership;s  turboprop remained on lease throughout 2000 and it lease rate
was constant. However as this aircraft is to be sold by the end of 2001 the sale
price will be affected due to the decrease in residual value for all turboprops.

(2) Railcars

(a) Nonpressurized, General Purpose Tank Cars

These cars are used to  transport  bulk liquid  commodities  and  chemicals  not
requiring pressurization, such as certain petroleum products, liquefied asphalt,
lubricating  oils,  molten sulfur,  vegetable oils and corn syrup. This car type
continued to be in high demand during 2000. The overall health of the market for
these types of  commodities is closely tied to both the United States (U.S.) and
global  economies,  as reflected in  movements  in the Gross  Domestic  Product,
personal  consumption  expenditures,  retail sales, and currency exchange rates.
The manufacturing,  automobile, and housing sectors are the largest consumers of
chemicals.  Within North America,  2000  carloadings of the commodity group that
includes chemicals and petroleum products rose 1% over 1999 levels.  Utilization
of the Partnership's nonpressurized tank cars remained above 98% during 2000.

(b) Pressurized Tank Cars

Pressurized  tank cars are used to transport  liquefied  petroleum  gas (natural
gas) and anhydrous  ammonia  (fertilizer).  The U.S. markets for natural gas are
industrial  applications  (46% of  estimated  demand in 2000),  residential  use
(21%),   electrical  generation  (15%),   commercial   applications  (15%),  and
transportation  (3%).  Natural gas consumption is expected to grow over the next
few years as most new electricity generation capacity planned for is expected to
be natural gas fired.  Within the fertilizer  industry,  demand is a function of
several factors,  including the level of grain prices,  the status of government
farm  subsidy  programs,  amount of farming  acreage  and mix of crops  planted,
weather  patterns,  farming  practices,  and  the  value  of  the  U.S.  dollar.
Population growth and dietary trends also play an indirect role.

On an industry wide basis,  North American  carloadings  of the commodity  group
that includes  petroleum and chemicals  increased 1% in 2000,  compared to 1999.
Consequently,  demand for  pressurized  tank cars remained  relatively  constant
during 2000,  with  utilization of this type of railcar  within the  Partnership
remaining  above 98%.  While  renewals  of existing  leases  continue at similar
rates, some cars continue to be renewed for "winter only" terms of approximately
six months. As a result,  there are many pressurized tank cars up for renewal in
the spring of 2001.

(c) Coal Railcars

Since most coal is shipped to domestic  electric  utilities,  demand for coal is
greatly  influenced by summer air  conditioning  and to a lesser extent,  winter
heating  requirements.  Coal car loadings in the United  States in 2000 remained
fairly consistent with those of 1999, decreasing by 1%.

Coal railcars owned by the  Partnership  are on a lease that expires on December
31, 2001.

(3) Marine Containers

The  Partnership's  fleet of both standard dry and specialized  containers is in
excess of twelve years of age,  and is  generally no longer  suitable for use in
international  commerce,  either due to its specific physical condition,  or the
lessees' preferences for newer equipment.  As individual containers are returned
from their  specific  lessees,  they are being  marketed  for sale on an "as is,
where is" basis.  The market for such sales,  although highly dependent upon the
specific  location and type of  container,  has  continued to be strong over the
last several years,  as it relates to standard dry  containers.  The Partnership
has in the  last  year  experienced  reduced  residual  values  on the  sale  of
refrigerated containers,  due primarily to technological  obsolesence associated
with this equipment's refrigeration machinery.

(4) Intermodal (Piggyback) Trailers

Intermodal  (piggyback) trailers are used to transport a variety of dry goods by
rail on flatcars, usually for distances of over 400 miles. Over the past decade,
intermodal  trailers  have  continued  to be  gradually  displaced  by  domestic
containers as the preferred  method of transport for such goods.  This is caused
by  railroads  offering  approximately  15% lower  freight  rates on  containers
compared to  trailers.  During  2000,  demand for  intermodal  trailers was more
volatile than historic  norms.  Slow demand occurred over the second half of the
year due to a slowing economy and continued  customer concerns over rail service
problems  associated  with mergers in the rail  industry.  Due to the decline in
demand,  which occurred over the latter half of 2000, overall,  shipments within
the  intermodal  trailer  market  declined  more than  expected for the year, or
approximately  10.0%  compared to the prior  year.  Average  utilization  of the
entire  intermodal  fleet rose from 73% in 1998 to 77% in 1999 and then declined
to 75% in 2000.

The  General  Partner  further  expanded  its  marketing  program to attract new
customers for the Partnership's  intermodal  trailers during 2000. These efforts
resulted in average  utilization for the  Partnership's  intermodal  trailers of
approximately 80% for the year, down 1% compared to 1999 levels.

The trend towards using domestic  containers  instead of intermodal  trailers is
expected to continue in the future.  Overall,  intermodal  trailer shipments are
forecast to decline by 6% -10% in 2001,  compared to the prior year,  due to the
anticipated  continued weakness of the overall economy.  As such, the nationwide
supply of  intermodal  trailers  is expected to be  approximately  10,000  units
higher than demand for 2001. Maintenance costs have increased  approximately 20%
due to improper repair methods  performed by the railroads and billed to owners.
For the  Partnership's  intermodal  fleet,  the General Partner will continue to
seek to expand its customer  base while  minimizing  trailer  downtime at repair
shops and  terminals.  Significant  efforts  will also be  undertaken  to reduce
maintenance costs and cartage costs.

(E) Government Regulations

The use,  maintenance,  and  ownership  of equipment  are  regulated by federal,
state,  local, or foreign  government  authorities.  Such regulations may impose
restrictions and financial burdens on the Partnership's  ownership and operation
of  equipment.  Changes  in  government  regulations,   industry  standards,  or
deregulation  may also  affect  the  ownership,  operation,  and  resale  of the
equipment.  Substantial  portions of the Partnership's  equipment  portfolio are
either registered or operated internationally.  Such equipment may be subject to
adverse  political,   government,  or  legal  actions,  including  the  risk  of
expropriation  or loss arising from  hostilities.  Certain of the  Partnership's
equipment is subject to extensive  safety and operating  regulations,  which may
require its removal from service or extensive  modification of such equipment to
meet  these  regulations,   at  considerable  cost  to  the  Partnership.   Such
regulations include but are not limited to:

(1) the U.S. Department of Transportation's Aircraft Capacity Act of 1990, which
limits or eliminates  the operation of commercial  aircraft in the United States
that do not meet certain  noise,  aging,  and corrosion  criteria.  In addition,
under United States Federal  Aviation  Regulations,  after December 31, 1999, no
person may operate an aircraft to or from any airport in the  contiguous  United
States  unless  that  aircraft  has been  shown to comply  with  Stage III noise
levels.  The  Partnership has one Stage II aircraft that does not meet Stage III
requirements.  The cost to husk-kit a Stage II aircraft  is  approximately  $2.0
million,  depending on the type of aircraft. The Partnership's Stage II aircraft
was classified as an asset held for sale as of December 31, 2000.

(2) the  Montreal  Protocol on  Substances  that Deplete the Ozone Layer and the
U.S. Clean Air Act  Amendments of 1990,  which call for the control and eventual
replacement  of  substances   that  have  been  found  to  cause  or  contribute
significantly to harmful effects to the stratospheric  ozone layer and which are
used extensively as refrigerants in refrigerated marine cargo containers;

(3) the U.S.  Department of Transportation's  Hazardous  Materials  Regulations,
which regulate the  classification  of and packaging  requirements  of hazardous
materials and which apply particularly to the Partnership's  tank railcars.  The
Federal  Railroad  Administration  has mandated that effective July 1, 2000, all
tank  railcars  must be  re-qualified  every ten  years  from the last test date
stenciled on each railcar to insure tank shell integrity.  Tank shell thickness,
weld seams,  and weld attachments must be inspected and repaired if necessary to
re-qualify a tank railcar for service.  The average cost of this  inspection  is
$1,800 for non-jacketed tank railcars and $3,600 for jacketed tank railcars, not
including any necessary repairs.  This inspection is to be performed at the next
scheduled tank test and every ten years  thereafter.  The Partnership  currently
owns 699  non-jacketed  tank  railcars and 478 jacketed tank railcars of which a
total of 30 tank railcars have been  inspected with no reportable  defects.  The
Association of American  Railroads (AAR) has mandated that effective October 19,
2000,  certain  tank cars  built by  Hawker  Siddeley  between  1961 and 1981 be
inspected for improper weld  attachments  for body mounted  brake  rigging.  The
inspection cost is minimal.  The modification  will cost between $900 and $1,300
per car, if necessary.  A schedule has been  established  by the AAR to complete
the inspection and modification as follows:  50% completion by October 31, 2001,
90% completion by October 31, 2002, and 100%  completion by October 31, 2003. As
of December 31, 2000, none of the Partnership's railcars have been inspected.

As of  December  31 2000,  the  Partnership  was in  compliance  with the  above
government  regulations.   Typically,   costs  related  to  extensive  equipment
modifications to meet government regulations are passed on to the lessee of that
equipment.

ITEM 2. PROPERTIES

The Partnership  neither owns nor leases any properties other than the equipment
it has purchased for leasing purposes.  As of December 31, 2000, the Partnership
owned a portfolio of  transportation  and related equipment as described in Item
1,  Table  1. The  Partnership  acquired  equipment  with  the  proceeds  of the
Partnership  offering of $199.7  million,  proceeds from debt financing of $41.9
million,  and by  reinvesting a portion of its operating cash flow in additional
equipment.

The  Partnership  maintains its principal  office at One Market,  Steuart Street
Tower, Suite 800, San Francisco,  California  94105-1301.  All office facilities
are provided by FSI without reimbursement by the Partnership.

ITEM 3. LEGAL PROCEEDINGS

The Partnership,  together with affiliates,  has initiated litigation in various
official forums in India against a defaulting Indian airline lessee to repossess
Partnership  property and to recover damages for failure to pay rent and failure
to maintain such  property in accordance  with  relevant  lease  contracts.  The
Partnership  has  repossessed  all of its  property  previously  leased  to such
airline, and the airline has ceased operations. In response to the Partnership's
collection efforts, the airline filed counter-claims  against the Partnership in
excess of the  Partnership's  claims  against the airline.  The General  Partner
believes that the airline's  counterclaims are completely without merit, and the
General Partner will vigorously defend against such  counterclaims.  The General
Partner believes the likelihood of an unfavorable outcome from the counterclaims
is remote.

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

No matters were submitted to a vote of the Partnership's limited partners during
the fourth quarter of its fiscal year ended December 31, 2000.









                      (This space intentionally left blank)













                                     PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED DEPOSITARY UNIT MATTERS


As of March 2, 2001, there were 9,871,073  depositary units  outstanding.  There
are 8,442 depositary unitholders of record as of the date of this report.

There are several  secondary markets that will facilitate sales and purchases of
depositary  units.  Secondary markets are characterized as having few buyers for
depositary  units and therefore are viewed as inefficient  vehicles for the sale
of depositary  units.  Presently,  there is no public market for the  depositary
units and none is likely to develop.

To prevent the units from being considered  publicly traded and thereby to avoid
taxation of the Partnership as an association treated as a corporation under the
Internal Revenue Code, the depositary units will not be transferable without the
consent  of  the  General  Partner,  which  may  be  withheld  in  its  absolute
discretion.  The General  Partner  intends to monitor  transfers  of units in an
effort to ensure that they do not exceed the  percentage or number  permitted by
certain safe harbors promulgated by the Internal Revenue Service. A transfer may
be  prohibited  if the  intended  transferee  is not an U.S.  citizen  or if the
transfer would cause any portion of the depositary  units of a "Qualified  Plan"
as defined by the Employee Retirement Income Security Act of 1974 and Individual
Retirement Accounts to exceed the allowable limit.

On January 4, 2001, the General  Partner for the  Partnership  announced that it
has begun  recognizing  transfers  involving trading of units in the partnership
for the 2001 calendar year. The  Partnership is listed on the OTC Bulletin Board
under the symbol GFZPZ.

In making the  announcement,  the General  Partner  noted  that,  as in previous
years,  it will continue to monitor the volume of such trades to ensure that the
Partnership  remain in  compliance  with Internal  Revenue  Service (IRS) Notice
88-75 and IRS Code  Section  7704.  These IRS  regulations  contain  safe harbor
provisions  stipulating  the  maximum  number of  partnership  units that can be
traded  during a  calendar  year in order for a  partnership  not to be deemed a
publicly traded partnership for income tax purposes.

Should the Partnership  approach the annual safe harbor  limitation  later on in
2001,  the General  Partner will,  at that time,  cease to recognize any further
transfers  involving  trading  of  Partnership  units.   Transfers  specifically
excluded from the safe harbor  limitations,  referred to in the  regulations  as
"transfers not involving  trading," which include transfers at death,  transfers
between family members,  and transfers involving  distributions from a qualified
retirement  plan,  will  continue  to  be  recognized  by  the  General  Partner
throughout the year.

Pursuant  to the terms of the  partnership  agreement,  the  General  Partner is
entitled to a 5% interest  in the  profits and losses and  distributions  of the
Partnership subject to certain special allocation provisions.

The Partnership  engaged in a plan to repurchase up to 250,000  depositary units
on behalf of the  Partnership.  There were no repurchases of depositary units in
2000 and 1999.  As of  December  31,  2000,  the  Partnership  had  purchased  a
cumulative  total of 128,853  depositary  units at a total cost of $0.9 million.
The General Partner does not plan any future  repurchase of depositary  units on
behalf of the Partnership.


ITEM 6. SELECTED FINANCIAL DATA

Table 2, below, lists selected financial data for the Partnership:

<TABLE>
                                     TABLE 2

                        For the Years Ended December 31,
   (In thousands of dollars, except weighted-average depositary unit amounts)

<CAPTION>
                                                     2000            1999            1998             1997            1996
                                                 --------------------------------------------------------------------------------
<S>                                              <C>             <C>             <C>              <C>                  <C>
    Operating results:
      Total revenues                             $   21,010      $   17,494      $   22,507       $   28,592       $   28,374
      Net gain on disposition
        of equipment                                  9,707           2,197           3,808            5,629            6,450
      Equity in net income of unconsolidated
         special-purpose entities                       918           1,413              49              857            7,475
      Net income                                     11,898           4,039           2,917            1,937            9,760

    At year-end:
      Total assets                               $   10,037      $   18,690      $   35,512       $   56,395       $   82,272
      Total liabilities                                 721          10,362          21,219           34,397           51,117
      Note payable                                       --           7,458          18,540           29,290           40,284

    Cash distribution                            $   10,910      $    7,793      $   10,394       $   10,391       $   11,964

    Cash distribution representing a return
      of capital to the limited partners         $        0      $    3,754      $    7,477       $    8,454       $    2,204

    Per weighted-average depositary unit:

    Net income                                   $     1.15(1)   $     0.37(1)   $     0.24(1)    $     0.14(1)    $     0.93(1)

    Cash distribution                            $     1.05      $     0.75      $     1.00       $     1.00       $     1.15

    Cash distribution representing a return
      of capital to the limited partners         $     0.00      $     0.38      $     0.76       $     0.86       $     0.22
----------
<FN>
(1) After an  increase  of income of $0.1  million  ($0.01 per  weighted-average
unit)  in  2000,  representing  allocations  from the  General  Partner  . After
reduction of income of $0.2 million ($0.02 per weighted-average depositary unit)
in 1999, $0.4 million ($0.04 per  weighted-average  depositary unit) in 1998 and
1997, and $0.1 million  ($0.01 per  weighted-average  depositary  unit) in 1996,
representing  allocations  to the General  Partner (see Note 1 to the  financial
statements).
</FN>
</TABLE>


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

(A) Introduction

Management's  discussion  and  analysis of  financial  condition  and results of
operations relates to the financial  statements of PLM Equipment Growth Fund III
(the Partnership).  The following  discussion and analysis of operations focuses
on the  performance of the  Partnership's  equipment in the various  segments in
which  it  operates  and  its  effect  on the  Partnership's  overall  financial
condition.

(B) Results of Operations -- Factors Affecting Performance

(1) Re-leasing Activity and Repricing Exposure to Current Economic Conditions

The exposure of the Partnership's  equipment  portfolio to repricing risk occurs
whenever the leases for the equipment expire or are otherwise terminated and the
equipment must be remarketed.  Major factors influencing the current market rate
for Partnership's equipment include, supply and demand for similar or comparable
types of  transport  capacity,  desirability  of the  equipment  in the  leasing
market,  market  conditions  for the  particular  industry  segment in which the
equipment is to be leased, overall economic conditions,  and various regulations
of concerning the use of the equipment. Equipment that is idle or out of service
between the expiration of one lease and the assumption of a subsequent lease can
result in a  reduction  of  contribution  to the  Partnership.  The  Partnership
experienced  re-leasing or repricing activity in 2000 primarily in its aircraft,
marine containers, trailers, and railcars.

     (a) Aircraft: One Boeing 737-200 Stage II commercial aircraft was off lease
during  2000.  This  aircraft  was  reclassed  to an  asset  held for sale as of
December 31, 2000. This aircraft was sold on February of 2001 for $2.3 million.

     (b)  Marine  containers:   The  Partnership's  remaining  marine  container
portfolio operates in  utilization-based  leasing pools and, as such, is exposed
to  considerable   repricing  activity.   The  Partnership's   marine  container
contribution declined from 1999 due to equipment sales during 1999 and 2000.

     (c)  Trailers:  All of the  Partnership's  trailer  portfolio  operates  in
short-line  railroad  systems.  The relatively  short duration of most leases in
these operations exposes the trailers to considerable re-leasing activity.

     (d) Railcars:  This equipment experienced  significant re-leasing activity.
Lease rates in this market are showing  signs of weakness  and has lead to lower
contribution to the Partnership as existing leases expire and renewal leases are
negotiated.

(2) Equipment Liquidations

Liquidation  of  Partnership  equipment and  investments  in USPEs  represents a
reduction in the size of the  equipment  portfolio and may result in a reduction
of contribution to the Partnership.  In 2000, the Partnership  disposed of owned
equipment that included  marine  containers,  trailers,  railcars,  aircraft and
disposed of an  interest  in a USPE entity that owned a marine  vessel for total
proceeds of $15.7 million.

(3) Equipment Valuation

In accordance  with  Financial  Accounting  Standards  Board  Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of",  the  General  Partner  reviews  the  carrying  value  of the
Partnership's  equipment portfolio at least quarterly and whenever circumstances
indicate the carrying  value of an asset may not be  recoverable  in relation to
expected   future   market   conditions   for  the  purpose  of  assessing   the
recoverability of the recorded amounts.  If projected  undiscounted future lease
revenues plus residual values are less than the carrying value of the equipment,
a loss on  revaluation is recorded.  A $0.2 million of loss on  revaluation  was
recorded  during 2000. No reductions  to the carrying  values of equipment  were
required during 1999 or 1998.


(C) Financial Condition -- Capital Resources and Liquidity

The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity  offering of $199.7  million.  No further
capital contributions from the limited partners are permitted under the terms of
the  Partnership's  limited  partnership  agreement.  The Partnership  relies on
operating  cash  flow  to  meet  its  operating  obligations  and to  make  cash
distributions to the limited partners.

For the year ended December 31, 2000, the Partnership  generated $4.8 million in
operating cash (net cash provided by operating  activities plus  non-liquidating
distributions   from  USPEs)  to  meet  its  operating   obligations   and  make
distributions  (total of $10.9 million in 2000) to the  partners,  but also used
undistributed  available  cash from prior  periods and proceeds from the sale of
equipment of approximately $6.1 million.

During 2000, the  Partnership  entered into contracts to sell the  Partnership's
737-200 stage II and Dash 8-300 aircraft.  Consequently,  these two aircraft are
reported as assets held for sale on December 31, 2000. There were no assets held
for sale as of December 31, 1999.

Investment in unconsolidated  special-purpose  entities  decreased $2.4 million.
The decrease resulted from liquidating and regular  distributions  received from
the USPEs of $3.3 million, partially offset by net income earned by the USPEs of
$0.9 million.

Accounts  payable  and  accrued  expenses  decreased  $0.3  million  due  to the
reduction of the equipment portfolio.

During 2000, the Partnership  borrowed $4.6 million from the General Partner and
repaid $5.2 million  including $0.6 million that was  outstanding as of December
31, 1999.

Lessee  deposits  and reserve  for repairs  decreased  by $1.2  million.  A $0.9
million decrease in engine reserves was due to the sale of two aircraft in 2000.
A $0.4  million  decrease in prepaid  lease  revenue  was due to fewer  lessee's
prepaying lease receivables.  The decreases were partially offset by an increase
of $0.1 million in deposits for a potential aircraft transaction.

During 2000, the Partnership paid off the note payable of $7.5 million.

The Partnership is in the active  liquidation phase. As a result the size of the
Partnerships  remaining  equipment  portfolio  and, in turn,  the amount of cash
flows from  operations will continue to become  progressively  smaller as assets
are sold. Although  distribution levels may be reduced,  significant asset sales
may result in special distributions to the Partners. The General Partner filed a
certificate of dissolution  on behalf of the  Partnership  with the Secretary of
State for the State of California on December 22, 2000, and following completion
of the liquidation of the Partnership which is anticipated to occur in 2001, the
General Partner will file a certificate of cancellation.

The General  Partner has not  planned any  expenditures,  nor is it aware of any
contingencies  that would  cause it to require  any  additional  capital to that
mentioned above.

(D) Results of Operations -- Year-to-Year Detailed Comparison

In September 1999, PLM Financial  Services,  Inc. (FSI or the General  Partner),
amended the corporate-by-laws of certain USPEs in which the Partnership,  or any
affiliated  program,  owns an interest  greater than 50%.  The  amendment to the
corporate-by-laws  provided that all decisions  regarding  the  acquisition  and
disposition of the investment as well as other significant business decisions of
that  investment  would  be  permitted  only  upon  unanimous   consent  of  the
Partnership  and all the  affiliated  programs  that  have an  ownership  in the
investment (the Amendment). As such, although the Partnership may own a majority
interest in a USPE, the Partnership does not control its management and thus the
equity method of accounting  will be used after adoption of the Amendment.  As a
result of the Amendment,  as of September 30, 1999, all jointly owned  equipment
in which the Partnership owned a majority interest, which had been consolidated,
were  reclassified  to investments in USPEs.  Lease revenues and direct expenses
for jointly owned  equipment in which the Partnership  held a majority  interest
were  reported  under the  consolidation  method of  accounting  during the nine
months  ended  September  30, 1999 and were  included  with the owned  equipment
operations. For the three months ended December 31, 1999 and twelve months ended
December 31, 2000,  lease  revenues and direct  expenses for these  entities are
reported  under  the  equity  method of  accounting  and are  included  with the
operations of the USPEs.

(1)  Comparison  of the  Partnership's  Operating  Results  for the Years  Ended
December 31, 2000 and 1999

(a) Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as repairs  and  maintenance,
equipment  operating and asset-specific  insurance  expenses) on owned equipment
decreased for the year ended  December 31, 2000 when compared to the same period
of 1999.  Certain expenses such as depreciation and amortization and general and
administrative  expenses  relating to the operating  segments (see Note 5 to the
audited financial statements), are not included in the owned equipment operation
discussion  because these expenses are more indirect in nature,  not a result of
operations but more the result of owning a portfolio of equipment. The following
table presents  lease revenues less direct  expenses by segment (in thousands of
dollars):

                                            For the Years
                                          Ended December 31,
                                        2000              1999
  ------------------------------------------------------------------
  Rail equipment               $         4,572   $         5,100
  Aircraft                               3,403             4,977
  Trailers                                 352               512
  Marine containers                         76               118
  Marine vessel                             --               660

Rail equipment: Railcar lease revenues and direct expenses were $6.6 million and
$2.0 million, respectively, for 2000, compared to $6.9 million and $1.8 million,
respectively,  during 1999.  Revenue  declined as a result of lower lease rates.
The  increase in direct  expenses of $0.2  million was a result of more  repairs
being required on rail equipment in 2000 than was needed during 1999.

Aircraft: Aircraft lease revenues and direct expenses were $3.9 million and $0.5
million,  respectively,  for 2000,  compared to $5.6  million and $0.7  million,
respectively,  during 1999. The decrease in lease  revenues and direct  expenses
was due to the sale of a total of four aircraft during 2000 and 1999.

Trailers:  Trailer lease revenues and direct expenses were $0.6 million and $0.2
million,  respectively,  for 2000,  compared to $0.7  million and $0.2  million,
respectively,  during 1999. The number of trailers owned by the  Partnership has
been declining due to dispositions.  The result of this declining fleet has been
a decrease in trailer contribution.

Marine  containers:  Marine  containers  lease revenues and direct expenses were
$0.1  million  and $4,000,  respectively  in 2000  compared to $0.1  million and
$2,000  respectively in 1999. The number of containers  owned by the Partnership
has been declining due to  dispositions.  The result of this declining fleet has
been a decrease in containers contribution.

Marine vessel:  Marine vessel lease  revenues and direct  expenses were zero for
2000, compared to $1.5 million and $0.8 million respectively for 1999.

The September 30, 1999 Amendment that changed the accounting  method of majority
held equipment from the consolidation  method of accounting to the equity method
of accounting  impacted the reporting of lease  revenues and direct  expenses of
one marine vessel. As a result of the Amendment,  during the year ended December
31, 2000,  lease revenues  decreased $1.5 million and direct expenses  decreased
$0.8 million when compared to the same period of 1999.

(b) Interest and Other Income

Interest and other income decreased by $0.2 million in 2000 compared to 1999 due
to lower income on the railcars related to mileage charges.

(c) Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $7.3 million for 2000  decreased from $11.4 million
for 1999. Significant variances are explained as follows:

     (i) A decrease of $2.9 million in  depreciation  and  amortization  expense
from 1999 levels resulted from an approximately $2.3 million decrease due to the
sale of certain  assets  during 2000 and 1999 and a decrease of $0.6 million was
the  result of the  Amendment  which  changed  the  accounting  method  used for
majority  held  equipment  from the  consolidation  method of  accounting to the
equity method of accounting.

     (ii)A decrease of $0.7 million in interest expense was due to the repayment
of the Partnership's debt in 2000.

     (iii) A decrease  of $0.4  million in bad debt  expense  from 1999.  A $0.3
million   decrease  was  due  to  the  General   Partner's   evaluation  of  the
collectability  of  receivables  due from  certain  lessees  and a $0.1  million
decrease was due to collection of $0.1 million from unpaid invoices in 2000 that
had previously been reserved for as bad debts. A similar  recovery did not occur
in 1999.

     (iv)A  decrease of $0.2 million in  management  fees was due to lower lease
revenues in 2000, compared to 1999.

     (v) A decrease of $0.1 million in general and administrative  expenses from
1999 levels was due to the reduction of the size of the Partnership's  equipment
portfolio.

     (vi)An  increase of $0.2 million in revaluation of equipment was due to the
loss on revaluation  of trailer  equipment in 2000. A similar loss did not occur
in 1999.

(d) Net Gain on Disposition of Owned Equipment

The net gain on  disposition of equipment was $9.7 million for 2000 and resulted
from the disposition of marine  containers,  trailers,  railcars,  and aircraft.
These  assets had an  aggregate  net book value of $2.8 million and were sold or
liquidated  for  proceeds  of  $12.5  million.  The net gain on  disposition  of
equipment in 1999 was $2.2 million and resulted from the  disposition  of marine
containers,  trailers,  railcars, and an aircraft. These assets had an aggregate
net book value of $1.6 million and were sold or liquidated  for proceeds of $3.8
million.

(e) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities

Net income (loss) generated from the operation of jointly-owned assets accounted
for under the  equity  method is shown in the  following  table by  segment  (in
thousands of dollars):

                                                         For the Years
                                                        Ended December 31,
                                                      2000               1999
                                             -----------------------------------
  Marine vessel                              $          895    $           (64)
  Aircraft, aircraft engines, and rotables               23              1,477
                                             -----------------------------------
    Equity in net income of USPEs            $          918    $         1,413
                                             ===================================

Marine  vessel:  The  Partnership's  share of  revenues  and  expenses of marine
vessels was $1.8 million, and $0.9 million,  respectively,  for 2000 compared to
$0.2 million and $0.3 million,  respectively, for 1999. During the third quarter
of 2000, the  Partnership's  56% interest in an entity owing a marine vessel was
sold for a gain of $1.1 million.

An increase in marine  vessel  revenues of $1.1 million was due to the gain from
the sale.  An  increase in marine  vessel  lease  revenues  of $0.5  million and
depreciation  expense,  direct  expenses,  and  administrative  expenses of $0.6
million during the year ended December 31, 2000, was caused by the September 30,
1999  Amendment  that changed the  accounting  method of majority held equipment
from the  consolidation  method of accounting to the equity method of accounting
for one marine vessel.

The lease revenues and depreciation expense, direct expenses, and administrative
expenses  for  the  majority   owned  marine  vessel  were  reported  under  the
consolidation  method of accounting under Owned Equipment  Operations during the
first nine months of 1999. The lease revenues and depreciation  expense,  direct
expenses, and administrative  expenses for the majority owned marine vessel were
reported under the equity method of accounting under USPE operations  during the
fourth quarter of 1999 and all of 2000.

Aircraft,  aircraft  engines,  and  rotables:  As  of  December  31,  2000,  the
Partnership  had no remaining  interest in entities  owning  aircraft,  aircraft
engines,  or rotables.  The interest in the trust that owned this  equipment was
sold in 1999, for a gain of $1.6 million.  The Partnership's  share of aircraft,
aircraft  engines,  and rotables  lease revenue and expenses of $23,000 and zero
for 2000 compared to zero and $0.1 million  respectively,  for 1999. The $23,000
of aircraft  revenues for 2000  represented  interest  income earned on accounts
receivable.  The  decrease  in revenue  and  expenses  is due to the sale of the
aircraft, aircraft engines, and rotables in the first quarter of 1999.

(f) Net Income

As a result of the foregoing,  the  Partnership's  net income for 2000 was $11.9
million,  compared to net income of $4.0 million during 1999. The  Partnership's
ability to operate,  liquidate  assets,  and re-lease  those assets whose leases
expire is subject to many factors, and the Partnership's  performance during the
year ended December 31, 2000 is not necessarily indicative of future periods. In
the year ended December 31, 2000, the Partnership  distributed  $10.4 million to
the limited partners, or $1.05 per weighted-average depositary unit.

(2)  Comparison  of the  Partnership's  Operating  Results  for the Years  Ended
December 31, 1999 and 1998

(a) Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as repairs  and  maintenance,
equipment  operating and asset-specific  insurance  expenses) on owned equipment
decreased for the year ended  December 31, 1999 when compared to the same period
of 1998.

The following  table presents lease revenues less direct expenses by segment (in
thousands of dollars):

                                                        For the Years
                                                      Ended December 31,
                                                    1999              1998
  ------------------------------------------------------------------------------
  Rail equipment                           $         5,100   $         4,768
  Aircraft                                           4,977             5,150
  Marine vessel                                        660             1,215
  Trailers                                             512             1,035
  Marine containers                                    118               272
  Mobile offshore drilling unit                         --               738

Rail equipment: Railcar lease revenues and direct expenses were $6.9 million and
$1.8 million, respectively, for 1999, compared to $7.1 million and $2.4 million,
respectively,  during 1998.  The decrease in lease  revenues of $0.2 million was
due to the  disposition of rail equipment  during 1999 and 1998. The decrease in
direct  expenses of $0.6  million was a result of fewer  running  repairs  being
required on rail equipment in 1999 than was needed during 1998.

Aircraft: Aircraft lease revenues and direct expenses were $5.6 million and $0.7
million,  respectively,  for 1999,  compared to $6.5  million and $1.3  million,
respectively,  during 1998. A $0.9 million decrease in lease revenues was due to
an aircraft being offlease  during the entire year of 1999 and another  aircraft
coming off lease in the third  quarter of 1999.  Both of these  aircraft were on
lease for all of 1998. The decrease in lease revenue was partially offset by the
increase in lease revenue of $0.5 million from an aircraft that was  transferred
into the Partnership's  owned equipment portfolio from a trust during the second
quarter  of 1998.  Direct  expense  decreased  by $0.6  million  due to  repairs
required on one aircraft in 1998 that were not needed in 1999.

Marine  vessel:  Marine  vessel  lease  revenues and direct  expenses  were $1.5
million and $0.8 million,  respectively,  for 1999, compared to $2.5 million and
$1.3 million  respectively  for 1998.  In September  1999,  the General  Partner
amended  the  coporate-by-laws  of the  USPEs in which the  Partnership  owns an
interest  greater than 50%. As a result of the amendment and the related  change
in accounting for these USPEs from  consolidation  basis to equity basis,  lease
revenues  for the  Partnership's  majority  held marine  vessel  decreased  $0.6
million for the year ended  December 31, 1999,  when compared to the same period
of 1998. Direct expenses for the Partnership's  majority held marine vessel also
decreased $0.2 due to the amendment and related change in accounting.

Trailers:  Trailer lease revenues and direct expenses were $0.7 million and $0.2
million,  respectively,  for 1999,  compared to $1.3  million and $0.2  million,
respectively,  during 1998. The number of trailers owned by the  Partnership has
been declining due to sales and dispositions. The result of this declining fleet
has been a decrease in trailer contribution.

Marine  containers:  Marine  containers  lease revenues and direct expenses were
$0.1  million  and $2,000,  respectively  in 1999  compared to $0.3  million and
$6,000  respectively in 1998.  Lease revenues  decreased by $0.2 million in 1999
compared to 1998 due to lower utilization rates.

Mobile  offshore  drilling  unit:  Mobile  offshore  drilling  unit (MODU) lease
revenues and direct  expenses were $0.8 million and $19,000,  respectively,  for
1998. The decrease in  contribution in 1999 compared to 1998 was due to the sale
of the Partnership's MODU in June of 1998.

(b)  Interest and Other Income

Interest  and other  income  increased  by $0.2  million  for 1999 due to higher
income on the railcars related to mileage charges.

(c) Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $11.4 million for 1999 decreased from $14.3 million
for 1998. Significant variances are explained as follows:

     (i) A decrease of $2.8 million in  depreciation  and  amortization  expense
from 1998 levels resulted from an approximately $0.7 million decrease due to the
sale of certain  assets during 1999 and 1998 and an  approximately  $2.1 million
decrease  resulting from the use of the  double-declining  balance  depreciation
method  which  results  in  greater  depreciation  the  first  years an asset is
owned.reflects the sale or disposition of certain Partnership assets.

     (ii)A decrease of $0.7 million in interest expense was due to lower average
debt balance outstanding during 1999 when compared to 1998.

     (iii) A decrease of $0.2 million in management  fees was due to lower lease
revenues in 1999, compared to 1998.

     (iv)An  increase of $0.6  million in bad debt  expense from 1998 was due to
the  collection of $0.4 million from past due  receivables  during 1999 that had
previously been reserved for as a bad debt and the General Partner's  evaluation
of the collectability of receivables due from certain lessees.

     (v) An increase of $0.2 million in general and administrative  expenses was
primarily  due  to  higher  legal  and  consulting  fees  related  to one of the
Partnership's aircraft.

(d) Net Gain on Disposition of Owned Equipment

The net gain on  disposition of equipment was $2.2 million for 1999 and resulted
from the disposition of marine containers,  trailers, railcars, and an aircraft.
These  assets had an  aggregate  net book value of $1.6 million and were sold or
liquidated  for  proceeds  of $3.8  million.  The net  gain  on  disposition  of
equipment  totaled $3.8 million for 1998 and resulted  from the  disposition  of
marine  containers,  trailers,  railcars,  and a mobile offshore  drilling unit.
These  assets had an  aggregate  net book value of $8.3 million and were sold or
liquidated for proceeds of $12.1 million.

(e)  Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities

Net income (loss) generated from the operation of jointly-owned assets accounted
for under the  equity  method is shown in the  following  table by  segment  (in
thousands of dollars):

                                                            For the Years
                                                          Ended December 31,
                                                       1999               1998
                                              ----------------------------------
  Aircraft, aircraft engines, and rotables    $       1,477    $          49
  Marine vessel                                         (64)              --
                                              ----------------------------------
    Equity in net income of USPEs             $       1,413    $          49
                                              ==================================

Aircraft,  aircraft  engines,  and  rotables:  As  of  December  31,  1999,  the
Partnership  had no remaining  interest in entities  owning  aircraft,  aircraft
engines, or rotables.  The interest in the trust was sold in 1999, for a gain of
$1.6 million. The Partnerships share of aircraft, aircraft engines, and rotables
revenue and expenses were $0 and $0.1 million  respectively,  for 1999, compared
to $1.2 million and $1.2  million  respectively,  during  1998.  The decrease in
revenue and expenses is due to the sale of the aircraft,  aircraft engines,  and
rotables in the first quarter of 1999.

Marine  vessel:  The  Partnership's  share of  revenues  and  expenses of marine
vessels was $0.2 million and $0.3 million,  respectively, for 1999. In September
1999, the General  Partner amended the  corporate-by-laws  of the USPEs in which
the Partnership  owns an interest greater than 50%. As a result of the amendment
and the related change in accounting for these USPEs from consolidation basis to
equity  basis,  lease  revenues  and  direct  expenses  are  discussed  in owned
equipment  operations for the nine months ended  September 30, 1999, and for the
entire year ended December 31, 1998, for the Partnership's  majority held marine
vessel.

(f) Net Income

As a result of the  foregoing,  the  Partnership's  net income for 1999 was $4.0
million,  compared to net income of $2.9 million during 1998. The  Partnership's
ability to operate,  liquidate  assets,  and re-lease  those assets whose leases
expire is subject to many factors, and the Partnership's  performance during the
year ended December 31, 1999 is not necessarily indicative of future periods. In
the year ended December 31, 1999, the  Partnership  distributed  $7.4 million to
the limited partners, or $0.75 per weighted-average depositary unit.

(E) Geographic Information

Certain  of the  Partnership's  equipment  operates  in  international  markets.
Although these operations expose the Partnership to certain currency, political,
credit, and economic risks, the General Partner believes these risks are minimal
or has  implemented  strategies  to control the risks.  Currency  risks are at a
minimum  because  all  invoicing,  with the  exception  of a number of  railcars
operating in Canada, is conducted in U.S. dollars. Political risks are minimized
by avoiding  operations in countries that do not have a stable  judicial  system
and established  commercial business laws. Credit support strategies for lessees
range from letters of credit supported by U.S. banks to cash deposits.  Although
these credit  support  mechanisms  allow the  Partnership  to maintain its lease
yield,  there are risks  associated with  slow-to-respond  judicial systems when
legal remedies are required to secure payment or repossess  equipment.  Economic
risks are inherent in all international  markets and the General Partner strives
to minimize this risk with market  analysis  prior to committing  equipment to a
particular  geographic area. Refer to Note 6 to the audited financial statements
for  information  on the  revenues,  net  income  (loss),  and net book value of
equipment in various geographic regions.

Revenues and net operating income by geographic  region are impacted by the time
period  the  asset is owned  and the  useful  life  ascribed  to the  asset  for
depreciation  purposes.  Net  income  (loss)  from  equipment  is  significantly
impacted  by  depreciation  charges,  which are  greatest  in the early years of
ownership due to the use of the double-declining balance method of depreciation.
The relationships of geographic revenues,  net income (loss), and net book value
of equipment are expected to change  significantly in the future, as assets come
off  lease and  decisions  are made to either  redeploy  the  assets in the most
advantageous geographic location or sell the assets.

The  Partnership's  owned  equipment  on  lease to the  U.S.  domiciled  lessees
consisted of railcars, and trailers.  During 2000, U.S. lease revenues accounted
for 21% of the lease revenues generated by wholly-and partially-owned equipment.
U.S.  operations  resulted in a net loss of $1.0 million including the gain from
this region of $0.1 million.

The  Partnership's  owned  equipment  on  lease  to  Canadian-domiciled  lessees
consisted of an owned aircraft and railcars.  Canadian lease revenues  accounted
for  54%  of  total  lease  revenues  generated  by  wholly-and  partially-owned
equipment.  Canadian  operations  generated net income of $8.7 million including
the gain from this region of $4.6 million.

The  Partnership's  owned  equipment  on  lease  to  European  domiciled  leases
consisted  of two owned  aircraft.  During  2000,  the lease  revenues for these
operations  accounted  for 18% of total lease  revenues  generated by wholly-and
partially-owned  equipment.  Net  income  from  this  region  was  $5.9  million
including the gain from this region of $5.0 million.

The  Partnership's  owned  equipment  and  investments  in  equipment  owned  by
unconsolidated  special-purpose  entity on lease to  lessees  in the rest of the
world consisted of marine containers and a partially-owned marine vessel. During
2000,  lease revenues for these  operations  accounted for 7% of the total lease
revenue generated by wholly-and  partially-owned equipment. Net income generated
from this  region was $1.0  million  including  the gain of this  region of $1.1
million.

The  Partnership  has an owned aircraft  located in Asia. This aircraft has been
off-lease  throughout  2000 and 1999 and was reclassed to an asset held for sale
as of December 31, 2000. During 2000, no revenue was earned from this region but
operations  resulted in a loss of $1.5  million due to repairs and  depreciation
expenses during 2000.

(F) Inflation

Inflation did not significantly  impact on the  Partnership's  operations during
2000, 1999, or 1998.

(G) Forward-Looking Information

Except for historical  information contained herein, the discussion in this Form
10-K contains  forward-looking  statements that involve risks and uncertainties,
such as statements of the Partnership's  plans,  objectives,  expectations,  and
intentions.  The cautionary  statements made in this Form 10-K should be read as
being applicable to all related forward-looking  statements wherever they appear
in this Form 10-K. The Partnership's actual results could differ materially from
those discussed here.

(H)  Outlook for the Future

The Partnership  entered its  liquidation  phase on January 1, 2000. The General
Partner is seeking to selectively re-lease or sell assets as the existing leases
expire.  Sale decisions will cause the operating  performance of the Partnership
to  decline  over  the  remainder  of its  life.  The  General  Partner  filed a
certificate of dissolution  on behalf of the  Partnership  with the Secretary of
State for the State of California on December 22, 2000, and following completion
of the liquidation of the Partnership which is anticipated to occur in 2001, the
General Partner will file a certificate of cancellation.

Factors affecting the Partnership's contribution during the year 2001:

1.  The  Partnership's  fleet  of  both  standard  dry  and  specialized  marine
containers  is in  excess  of  twelve  years of age and is  generally  no longer
suitable for use in international  commerce either due to it's specific physical
condition,   or  lessees  preferences  for  newer  equipment.   Demand  for  the
Partnership's marine containers will continue to be weak due to their age.

2.  Railcar  loadings in North  America  have  continued  to be high,  however a
softening  in the market is  expected.  Lease  rates in this  market are showing
signs of  weakness  and has lead to lower  contribution  to the  Partnership  as
existing leases expire and renewal leases are negotiated.

The  ability  of the  Partnership  to  realize  acceptable  lease  rates  on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and government or other regulations.  The  unpredictability of these factors, or
of their  occurrence,  makes it  difficult  for the  General  Partner to clearly
define trends or influences that may impact the performance of the Partnership's
equipment.  The General Partner continually  monitors both the equipment markets
and the performance of the Partnership's equipment in these markets. The General
Partner  may  decide to reduce the  Partnership's  exposure  to those  equipment
markets in which it  determines  that it cannot  operate  equipment  and achieve
acceptable rates of return.

The  Partnership  intends  to use cash  flow  from  operations  to  satisfy  its
operating requirements and pay cash distributions to the investors.

Several other factors may affect the Partnership's  operating performance in the
year 2001, including changes in the markets for the Partnership's  equipment and
changes in the regulatory environment in which that equipment operates.

(1) Repricing Risk

Certain of the Partnership's  marine  containers,  railcars and trailers will be
remarketed in 2001 as existing  leases expire,  exposing the Partnership to some
repricing   risk/opportunity.   Additionally,   the   Partnership   entered  its
liquidation phase on January 1, 2000 and has commenced an orderly liquidation of
the  Partnership's  assets.  In either case, the General Partner intends to sell
equipment at  prevailing  market  rates;  however,  the General  Partner  cannot
predict  these  future  rates  with  any  certainty  at this  time,  and  cannot
accurately assess the effect of such activity on future Partnership performance.

(2) Impact of Government Regulations on Future Operations

The General  Partner  operates the  Partnership's  equipment in accordance  with
current applicable regulations (see Item 1, Section E, Government  Regulations).
However, the continuing implementation of new or modified regulations by some of
the  authorities  mentioned  previously,  or others,  may  adversely  affect the
Partnership's  ability to continue to own or operate equipment in its portfolio.
Additionally,  regulatory  systems  vary  from  country  to  country,  which may
increase the burden to the Partnership of meeting regulatory  compliance for the
same equipment  operated  between  countries.  Ongoing changes in the regulatory
environment, both in the United States and internationally,  cannot be predicted
with accuracy,  and preclude the General Partner from  determining the impact of
such changes on Partnership operations,  purchases, or sale of equipment.  Under
U.S.  Federal  Aviation  Regulations,  after  December 31,  1999,  no person may
operate an  aircraft  to or from any  airport in the  contiguous  United  States
unless that aircraft has been shown to comply with Stage III noise  levels.  The
Partnership has one Stage II aircraft that does not meet Stage III requirements.
As of December 31, 2000,  this aircraft was reclassed to an asset held for sale.
Furthermore,  the Federal  Railroad  Administration  has mandated that effective
July 1, 2000,  all tank railcars must be  re-qualified  every ten years from the
last test date  stenciled on each railcar to insure tank shell  integrity.  Tank
shell thickness, weld seams, and weld attachments must be inspected and repaired
if necessary to re-qualify a tank railcar for service.  The average cost of this
inspection is $1,800 for non-jacketed tank railcars and $3,600 for jacketed tank
railcars,  not  including  any  necessary  repairs.  This  inspection  is  to be
performed at the next  scheduled tank test and every ten years  thereafter.  The
Partnership  currently owns 699 non-jacketed tank railcars and 478 jacketed tank
railcars  of which a total  of 30 tank  railcars  have  been  inspected  with no
reportable  defects.  The  Association of American  Railroads (AAR) has mandated
that  effective  October 19, 2000,  certain  tank cars built by Hawker  Siddeley
between  1961 and 1981 be  inspected  for  improper  weld  attachments  for body
mounted brake rigging.  The inspection cost is minimal.  The  modification  will
cost  between  $900 and  $1,300  per car,  if  necessary.  A  schedule  has been
established by the AAR to complete the inspection and  modification  as follows:
50% completion by October 31, 2001, 90% completion by October 31, 2002, and 100%
completion  by  October  31,  2003.  As  of  December  31,  2000,  none  of  the
Partnership's railcars have been inspected.

(3) Distributions

During the active  liquidation  phase,  the Partnership  will use operating cash
flow and proceeds from the sale of equipment to meet its operating  obligations,
and make distributions to the partners.  Although the General Partner intends to
maintain a sustainable level of distributions  prior to final liquidation of the
Partnership, actual Partnership performance and other considerations may require
adjustments to then-existing  distribution  levels.  In the long term,  changing
market  conditions and used equipment  values  preclude the General Partner from
accurately  determining the impact of future  re-leasing  activity and equipment
sales on Partnership performance and liquidity.

Since the Partnership has entered the active  liquidation phase, the size of the
Partnership's remaining equipment portfolio and, in turn, the amount of net cash
flows from  operations will continue to become  progressively  smaller as assets
are sold. Although  distribution levels may be reduced,  significant asset sales
may result in special distributions to unitholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Partnership's  primary market risk exposure is currency  devaluation  risk.
During 2000,  79% of the  Partnership's  total lease  revenues  from  wholly-and
partially-owned equipment came from non-United States domiciled lessees. Most of
the  Partnership's  leases require payment in United States  currency.  If these
lessees currency devalues against the U.S. dollar, the lessees could potentially
encounter difficulty in making the U.S. dollar denominated lease payments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  financial  statements  for the  Partnership  are  listed  in the  Index  to
Financial Statements included in Item 14(a) of this Annual Report on Form 10-K.

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

None.






                    (This space is intentionally left blank)








                                   (PART III)

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF PLM FINANCIAL SERVICES, INC.

As of the filing date of this report,  the directors  and executive  officers of
PLM Financial  Services,  Inc. (and key executive  officers of its subsidiaries)
are as follows:

Name              Age  Position
----------------- ---- ---------------------------------------------------------

Stephen M. Bess   55   President, PLM Financial Services, Inc., PLM Investment
                       Management, Inc. and PLM Transportation Equipment
                       Corporation, Director of PLM Financial Services, Inc.

Richard K Brock   38   Vice President and Chief Financial Officer, PLM Financial
                       Services, Inc., PLM Investment Management, Inc. and PLM
                       Transportation Equipment Corporation,
                       Director of PLM Financial Services, Inc.

Susan C. Santo    38   Vice President, Secretary, and General Counsel,
                       PLM Financial Services, Inc.,
                       Director of PLM Financial Services, Inc.

Stephen M. Bess was appointed a Director of PLM Financial Services, Inc. in July
1997.  Mr. Bess has served as President of PLM Investment  Management,  Inc., an
indirect wholly-owned subsidiary of PLM International, since August 1989, and as
an executive  officer of certain other of PLM  International's  subsidiaries  or
affiliates since 1982.

Richard K Brock was  appointed a Director  of PLM  Financial  Services,  Inc. in
October 1, 2000. Mr. Brock was appointed as Vice  President and Chief  Financial
Officer of PLM International and PLM Financial  Services,  Inc. in January 2000,
having  served as Acting  Chief  Financial  Officer  since June 1999 and as Vice
President  and  Corporate  Controller  of PLM  International  and PLM  Financial
Services,  Inc.  since June 1997.  Prior to June 1997,  Mr.  Brock  served as an
accounting  manager  beginning in September 1991 and as Director of Planning and
General Accounting beginning in February 1994.

Susan C. Santo was  appointed  a Director of PLM  Financial  Services,  Inc.,  a
subsidiary of PLM International, in October 1, 2000. Miss Santo was appointed as
Vice  President,  Secretary,  and General Counsel of PLM  International  and PLM
Financial Services, Inc. in November 1997. She has worked as an attorney for PLM
International  and PLM  Financial  Services,  Inc.  since 1990 and served as its
Senior Attorney from 1994 until her appointment as General Counsel.

The directors of PLM Financial Services, Inc. are elected for a one-year term or
until their successors are elected and qualified.  No family relationships exist
between any director or executive officer of PLM Financial  Services,  Inc., PLM
Transportation Equipment Corp., or PLM Investment Management, Inc.







                    (This space is intentionally left blank)







ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no directors, officers, or employees. The Partnership had no
pension,  profit  sharing,  retirement,  or similar benefit plan in effect as of
December 31, 2000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(A)    Security Ownership of Certain Beneficial Owners

The  General  Partner is entitled to a 5% interest in the profits and losses and
distributions of the Partnership  subject to certain  allocations of income.  In
addition  to  its  General  Partner  interest,  FSI  owned  8,000  units  in the
Partnership  as of December 31, 2000.  As of December 31, 2000,  no investor was
known by the General Partner to beneficially  own more than 5% of the depositary
units of the Partnership.

(B) Security Ownership of Management

Table 3,  below,  sets  forth,  as of the date of this  report,  the  amount and
percent of the Partnership's  outstanding depositary units beneficially owned by
each of the  directors  and  executive  officers and all directors and executive
officers as a group of the General Partner and its affiliates:

                                     TABLE 3

         NAME                             DEPOSITARY UNITS     PERCENT OF UNITS
         ----                             ----------------     ----------------

         Robert N. Tidball                      2,000                *

         All directors and officers
         As a group (1 person)                  2,000                *

         * Less than 1%.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Management and Others

During 2000, the Partnership paid or accrued $0.6 million for management fees to
PLM Financial Services, Inc. (FSI) or its affiliates. The Partnership reimbursed
FSI or its  affiliates  $0.4  million  for  administrative  and data  processing
services performed on behalf of the Partnership during 2000.

During  2000,  the  USPEs  paid  or  accrued  the  following  fees to FSI or its
affiliates  (based  on  the  Partnership's  proportional  share  of  ownership):
management  fees,  $36,000  and  administrative  and data  processing  services,
$10,000.





                                     PART IV

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

(A)  1. Financial Statements

     The  financial  statements  listed in the  accompanying  Index to Financial
     Statements are filed as part of this Annual Report on Form 10-K.

     2. Financial Statements required under Regulation S-X Rule 3-09

     The  following  financial  statements  are filed as Exhibits of this Annual
     Report on Form 10-K:

     a. TAP Trust

(B)  Financial Statement Schedules

     Schedule II Valuation Accounts

     All other financial  statement schedules have been omitted, as the required
     information  is not  pertinent to the  registrant  or is not  material,  or
     because the  information  required is included in the financial  statements
     and notes thereto.

(C)  Reports on Form 8-K

     None.

(D)  Exhibits

     4.   Limited   Partnership   Agreement  of  Partnership.   Incorporated  by
          reference  to the  Partnership's  Registration  Statement  on Form S-1
          (Reg. No.  33-18104),  which became  effective with the Securities and
          Exchange Commission on March 25, 1988.

     4.1  Amendment,  dated November 18, 1991, to Limited Partnership  Agreement
          of Partnership.  Incorporated by reference to the Partnership's Annual
          Report on Form 10-K dated  December 31, 1991 filed with the Securities
          and Exchange Commission on March 30, 1992.

     10.1 Management   Agreement   between   Partnership   and  PLM   Investment
          Management,  Inc.  Incorporated  by  reference  to  the  Partnership's
          Registration  Statement on Form S-1 (Reg. No. 33-18104),  which became
          effective  with the  Securities  and Exchange  Commission on March 25,
          1988.

     24.  Powers of Attorney.

     Financial Statements required under Regulation S-X Rule 3-09:

     99.1 TAP Trust



                                   SIGNATURES

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

The Partnership has no directors or officers.  The General Partner has signed on
behalf of the Partnership by duly authorized officers.


Date:  March 12, 2001                      PLM EQUIPMENT GROWTH FUND III
                                           PARTNERSHIP

                                           By:      PLM Financial Services, Inc.
                                                    General Partner


                                           By:      /s/ Stephen M. Bess
                                                    Stephen M. Bess
                                                    President and Director


                                           By:      /s/ Richard K Brock

                                                    Richard K Brock
                                                    Vice President and
                                                    Chief Financial Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  directors of the  Partnership's  General
Partner on the dates indicated.


NAME                                   CAPACITY                  DATE
----                                   --------                  ----

*___________________
Stephen M. Bess                         Director, FSI             March 12, 2001


*___________________
Richard K Brock                         Director, FSI             March 12, 2001


*___________________
Susan C. Santo                          Director, FSI             March 12, 2001



*Susan C. Santo,  by signing her name hereto,  does sign this document on behalf
of the persons  indicated  above pursuant to powers of attorney duly executed by
such persons and filed with the Securities and Exchange Commission.



/s/ Susan C. Santo
Susan C. Santo
Attorney-in-Fact




                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          INDEX TO FINANCIAL STATEMENTS


                                  (Item 14(a))


                                                                            Page
                                                                           ----
Independent auditors' report                                                 25

Balance sheets as of December 31, 2000 and 1999                              26

Statements of income for the years ended December 31,
     2000, 1999, and 1998                                                    27

Statements of changes in partners' capital for the years
     ended December 31, 2000, 1999, and 1998                                 28

Statements of cash flows for the years ended December 31,
     2000, 1999, and 1998                                                    29

Notes to financial statements                                             30-40

Independent auditor report on financial statement schedule                   41

Schedule II Valuation Accounts                                               42




                          INDEPENDENT AUDITORS' REPORT


The Partners
PLM Equipment Growth Fund III:



We have audited the  accompanying  financial  statements of PLM Equipment Growth
Fund III (the  Partnership)  as listed in the  accompanying  index to  financial
statements.   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 have  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.

As described in Note 1 to the financial  statements,  PLM Equipment  Growth Fund
III,  in  accordance  with  the  limited  partnership  agreement,   entered  its
liquidation phase on January 1, 2000 and has commenced an orderly liquidation of
the Partnership  assets.  The General Partner filed a certificate of dissolution
on  behalf  of the  Partnership  with the  Secretary  of State  for the State of
California on December 22, 2000, and following  completion of the liquidation of
the Partnership  which is anticipated to occur in 2001, the General Partner will
file a certificate of cancellation.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of PLM Equipment Growth Fund III
as of December 31, 2000 and 1999, and the results of its operations and its cash
flows for each of the years in the three-year  period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America.




SAN FRANCISCO, CALIFORNIA
March 2, 2001





                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                                 BALANCE SHEETS
                                  December 31,
                 (in thousands of dollars, except unit amounts)

<TABLE>
<CAPTION>


                                                                            2000                 1999
                                                                         -----------------------------------
<S>                                                                      <C>                  <C>
  ASSETS

  Equipment held for operating leases, at cost                           $   40,028           $   84,191
  Less accumulated depreciation                                             (34,361)             (69,303)
                                                                         ---------------------------------
                                                                              5,667               14,888
  Equipment held for sale                                                     1,703                   --
  --------------------------------------------------------------------------------------------------------
      Net equipment                                                           7,370               14,888

  Cash and cash equivalents                                                   1,832                  486
  Restricted cash                                                               125                   --
  Accounts receivable, net of allowance for doubtful
      accounts of $455 in 2000 and $1,757 in 1999                               591                  727
  Investments in unconsolidated special-purpose entities                         76                2,498
  Debt issuance costs, net of accumulated
    amortization of $309 in 1999                                                 --                   31
  Prepaid expenses and other assets                                              43                   60
                                                                         ---------------------------------

        Total assets                                                     $   10,037           $   18,690
                                                                         =================================

  LIABILITIES AND PARTNERS' CAPITAL

  Liabilities
  Accounts payable and accrued expenses                                  $      462           $      786
  Due to affiliates                                                              72                  699
  Lessee deposits and reserve for repairs                                       187                1,419
  Note payable                                                                   --                7,458
                                                                         ---------------------------------
    Total liabilities                                                           721               10,362
                                                                         ---------------------------------

  Partners' capital
  Limited partners (9,871,073 depositary units
      as of December 31, 2000 and 1999)                                       9,316                8,328
  General Partner                                                                --                   --
                                                                         ---------------------------------
    Total partners' capital                                                   9,316                8,328
                                                                         ---------------------------------

        Total liabilities and partners' capital                          $   10,037            $  18,690
                                                                         =================================

</TABLE>



                 See accompanying notes to financial statements.





                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                              STATEMENTS OF INCOME
                        FOR THE YEARS ENDED DECEMBER 31,
        (in thousands of dollars, except weighted-average unit amounts)
<TABLE>
<CAPTION>


                                                                            2000            1999           1998
                                                                        --------------------------------------------
<S>                                                                      <C>             <C>            <C>
  REVENUES

  Lease revenue                                                          $  11,098       $  14,852      $  18,413
  Interest and other income                                                    205             445            286
  Net gain on disposition of equipment                                       9,707           2,197          3,808
                                                                         -------------------------------------------
    Total revenues                                                          21,010          17,494         22,507
                                                                         -------------------------------------------

  EXPENSES

  Depreciation and amortization                                              4,773           7,628         10,461
  Repairs and maintenance                                                    2,564           2,619          3,978
  Equipment operating expenses                                                  33             668          1,006
  Insurance expenses                                                           132             237            303
  Management fees to affiliate                                                 634             807          1,049
  Interest expense                                                             306           1,021          1,706
  General and administrative expenses to affiliates                            410             504            587
  Other general and administrative expenses                                  1,070           1,098            863
  (Recovery of) provision for  bad debts                                       (94 )           308           (335 )
  Revaluation of equipment                                                     202              --             --
  ------------------------------------------------------------------------------------------------------------------
    Total expenses                                                          10,030          14,890         19,618
                                                                         -------------------------------------------

  Minority interests                                                            --              22            (21 )

  Equity in net income of unconsolidated
        special-purpose entities                                               918           1,413             49
                                                                         -------------------------------------------

        Net income                                                       $  11,898           4,039      $   2,917
                                                                         ===========================================

  PARTNERS' SHARE OF NET INCOME

  Limited partners                                                       $  11,353           3,649      $   2,397
  General Partner                                                              545             390            520
                                                                         -------------------------------------------

        Total                                                            $  11,898           4,039      $   2,917
                                                                         ===========================================

  Limited partners' net income per weighted-average depositary
    unit                                                                 $    1.15            0.37      $    0.24
                                                                         ===========================================

  Cash distribution                                                      $  10,910           7,793      $  10,394
                                                                         ===========================================

  Cash distribution per weighted-average depositary unit                 $    1.05            0.75      $    1.00
                                                                         ===========================================

</TABLE>








                 See accompanying notes to financial statements.







                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
                            (in thousands of dollars)

<TABLE>
<CAPTION>

                                                         Limited           General
                                                         Partners          Partner            Total
                                                       -------------------------------------------------

<S>                                                    <C>                 <C>               <C>
    Partners' capital as of December 31, 1997          $   19,559          $     --          $  19,559

  Net income                                                2,397               520          $   2,917

  Cash distribution                                        (9,874)             (520)           (10,394)
                                                       --------------------------------------------------

    Partners' capital as of December 31, 1998              12,082                --             12,082

  Net income                                                3,649               390              4,039

  Cash distribution                                        (7,403)             (390)            (7,793)
                                                       --------------------------------------------------

    Partners' capital as of December 31, 1999               8,328                --              8,328

  Net income                                               11,353               545             11,898

  Cash distribution                                       (10,365)             (545)           (10,910)
                                                       --------------------------------------------------

    Partners' capital as of December 31, 2000          $    9,316          $     --          $   9,316
                                                       ==================================================


</TABLE>









                 See accompanying notes to financial statements.





                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                            STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,
                            (In thousands of dollars)
<TABLE>
<CAPTION>



                                                                            2000            1999            1998
                                                                        ---------------------------------------------
<S>                                                                      <C>             <C>             <C>
  OPERATING ACTIVITIES

  Net income                                                             $   11,898      $    4,039      $    2,917
  Adjustments to reconcile net income
        to net cash provided by (used in) operating activities:
    Depreciation and amortization                                             4,773           7,628          10,461
    Net gain on disposition of equipment                                     (9,707)         (2,197)         (3,808)
    Revaluation of equipment                                                    202              --              --
    Equity in net income from unconsolidated special-
        purpose entities                                                       (918)         (1,413)            (49)
    Changes in operating assets and liabilities:
      Accounts receivable                                                       136             210             207
      Restricted cash                                                          (125)             --              --
      Prepaid expenses and other assets                                          17             (33)             23
      Accounts payable and accrued expenses                                    (324)           (482)           (275)
      Due to affiliates                                                         (27)             (6)           (267)
      Lessee deposits and reserves for repairs                               (1,232)            478             (94)
      Minority interests                                                         --            (224)           (228)
  -------------------------------------------------------------------------------------------------------------------
        Net cash provided by operating activities                             4,693           8,000           8,887
                                                                         --------------------------------------------

  Investing activities
  Equipment purchased and placed in unconsolidated
      special-purpose entities                                                   --              --          (1,198)
  Due to affiliates                                                              --             (36)             --
  Payment for capitalized repairs                                              (231)            (26)           (126)
  Payments of acquisition fees to affiliate                                      --              --             (54)
  Payments of lease negotiation fees to affiliate                                --              --             (12)
  Proceeds from disposition of equipment                                     12,512           3,790          12,077
  Liquidating distribution from unconsolidated
      special-purpose entities                                                3,218           3,548              --
  Distribution from unconsolidated
      special-purpose entities                                                  122              56           2,552
  -------------------------------------------------------------------------------------------------------------------
        Net cash provided by investing activities                            15,621           7,332          13,239
                                                                         --------------------------------------------

  Financing activities
  Net receipts from (repayments to) affiliate                                  (600)            600          (1,792)
  Principal payments on note payable                                         (7,458)        (11,082)        (10,750)
  Cash distribution paid to limited partners                                (10,365)         (7,403)         (9,874)
  Cash distribution paid to General Partner                                    (545)           (390)           (520)
  -------------------------------------------------------------------------------------------------------------------
        Net cash used in financing activities                               (18,968)        (18,275)        (22,936)
                                                                         --------------------------------------------

  Net increase (decrease) in cash and cash equivalents                        1,346          (2,943)           (810)
  Cash and cash equivalents at beginning of year                                486           3,429           4,239
                                                                         --------------------------------------------
  Cash and cash equivalents at end of year                               $    1,832      $      486      $    3,429
                                                                         ============================================

  Supplemental information
  Interest paid                                                          $      306      $    1,021      $    1,712
  ===================================================================================================================
</TABLE>






                 See accompanying notes to financial statements.




                            EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2000

1.   BASIS OF PRESENTATION

     ORGANIZATION

     PLM  Equipment  Growth  Fund III, a  California  limited  partnership  (the
     Partnership),  was formed on October 15, 1987 to engage in the  business of
     owning,   leasing,   or   otherwise   investing   in   predominately   used
     transportation and related equipment. PLM Financial Services, Inc. (FSI) is
     the General Partner of the Partnership. FSI is a wholly-owned subsidiary of
     PLM International, Inc. (PLM International).

     Beginning in the Partnership's  eleventh year of operations which commenced
     on January 1, 2000,  the General  Partner began the orderly  liquidation of
     the Partnership's  assets.  During the liquidation phase, the Partnership's
     assets will continue to be reported at the lower of carrying amount or fair
     value  less  cost to sell.  The  General  Partner  filed a  certificate  of
     dissolution  on behalf of the  Partnership  with the Secretary of State for
     the State of California on December 31, 2000,  and following  completion of
     the liquidation of the  Partnership  which is anticipated to occur in 2001,
     will file a certificate of cancellation.

     FSI manages the affairs of the Partnership.  The cash  distributions of the
     Partnership are generally  allocated 95% to the limited  partners and 5% to
     the General Partner.  Net income is allocated to the General Partner to the
     extent  necessary to cause the General  Partner's  capital account to equal
     zero. The General Partner is also entitled to a subordinated  incentive fee
     equal  to  7.5%  of  surplus  distributions,  as  defined  in  the  limited
     partnership agreement, remaining after the limited partners have received a
     certain minimum rate of return.

     These  financial  statements  have been  prepared on the  accrual  basis of
     accounting in accordance  with generally  accepted  accounting  principles.
     This requires  management to make estimates and assumptions that affect the
     reported  amounts  of assets and  liabilities,  disclosures  of  contingent
     assets and  liabilities  at the date of the financial  statements,  and the
     reported  amounts of revenues and  expenses  during the  reporting  period.
     Actual results could differ from those estimates.

     OPERATIONS

     The  equipment  owned by the  Partnership  is managed,  under a  continuing
     management   agreement  by  PLM  Investment   Management,   Inc.  (IMI),  a
     wholly-owned  subsidiary of FSI. IMI receives a monthly management fee from
     the   Partnership  for  managing  the  equipment  (see  Note  2).  FSI,  in
     conjunction with its subsidiaries, sells equipment to investor programs and
     third  parties,  manages  pools  of  equipment  under  agreements  with the
     investor programs, and is a general partner of other programs.

     ACCOUNTING FOR LEASES

     The Partnership's leasing operations consist of operating leases. Under the
     operating lease method of accounting,  the leased asset is recorded at cost
     and  depreciated  over its  estimated  useful  life.  Rental  payments  are
     recorded  as revenue  over the lease  term.  Lease  origination  costs were
     capitalized and amortized over the term of the lease.

     DEPRECIATION AND AMORTIZATION

     Depreciation of  transportation  equipment,  held for operating  leases, is
     computed on the  double-declining  balance  method,  taking a full  month's
     depreciation in the month of acquisition, based upon estimated useful lives
     of 15 years for  railcars  and 12 years for most other types of  equipment.
     Certain aircraft are depreciated under the double-declining  balance method
     over the lease  term  which  approximates  the assets  economic  life.  The
     depreciation  method  is  changed  to  straight-line   method  when  annual
     depreciation expense using the straight-line method exceeds that calculated
     by



                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

1.   BASIS OF PRESENTATION (CONTINUED)

     DEPRECIATION AND AMORTIZATION (CONTINUED)

     the double-declining balance method. Acquisition fees have been capitalized
     as part of the cost of the  equipment and  amortized  over the  equipment's
     depreciable  life.  Lease  negotiation  fees are amortized over the initial
     equipment  lease term.  Debt  placement fees are amortized over the term of
     the related loan. Major expenditures that are expected to extend the useful
     lives or reduce future operating  expenses of equipment are capitalized and
     amortized over the estimated remaining life of the equipment.

     TRANSPORTATION EQUIPMENT

     In accordance with Financial  Accounting Standards Board Statement No. 121,
     "Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
     Assets to Be Disposed Of", the General  Partner  reviews the carrying value
     of the  Partnership's  equipment  portfolio at least quarterly and whenever
     circumstances   indicate  the  carrying  value  of  an  asset  may  not  be
     recoverable  in relation  to  expected  future  market  conditions  for the
     purpose  of  assessing  the  recoverability  of the  recorded  amounts.  If
     projected  undiscounted  future cash flows are less than the carrying value
     of the equipment,  a loss on revaluation is recorded. A loss on revaluation
     of $0.2 million was recorded  during 2000.  No  reductions  to the carrying
     values of equipment were required during 1999 or 1998.

     INVESTMENTS IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITIES

     The Partnership has interests in  unconsolidated  special-purpose  entities
     (USPEs) that owned transportation  equipment.  As of December 31, 2000, the
     Partnership owns a majority interest in one such entity. Prior to September
     30, 1999, the Partnership controlled the management of this entity and thus
     it  was  consolidated  into  the  Partnership's  financial  statements.  On
     September 30, 1999, the  corporate-by-laws  of this entitiy were changed to
     require a unanimous vote by all owners on major business  decisions.  Thus,
     from September 30, 1999 forward,  the  Partnership  no longer  controls the
     management  of this entity,  and the  accounting  method for the entity was
     changed from the consolidation method to the equity method.

     The  Partnership's  investment  in USPEs  includes  acquisition  and  lease
     negotiation  fees paid by the Partnership to PLM  Transportation  Equipment
     Corporation   (TEC).   TEC  is  a  wholly-owned   subsidiary  of  FSI.  The
     Partnership's  interest  in USPEs are  managed  by IMI.  The  Partnership's
     equity  interest  in the net  income  (loss) of USPEs is  reflected  net of
     management fees paid or payable to IMI and the  amortization of acquisition
     and lease negotiation fees paid to TEC.

     REPAIRS AND MAINTENANCE

     Repair and  maintenance  costs for  railcars  and  trailers are usually the
     obligation  of  the  Partnership.   Maintenance   costs  for  aircraft  and
     containers  are  usually  the  obligation  of the  lessee.  If they are not
     covered by the lessee, they are charged against operations as incurred.  To
     meet  the  maintenance  requirements  of  certain  aircraft  airframes  and
     engines, reserve accounts are prefunded by the lessee. The reserve accounts
     are  included  in the  balance  sheet as lessee  deposits  and  reserve for
     repairs.




                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

1.   BASIS OF PRESENTATION (CONTINUED)

     NET INCOME AND DISTRIBUTIONS PER DEPOSITARY UNIT

     Cash  distributions  of the  Partnership  are  allocated 95% to the limited
     partners and 5% to the General Partner and may include amounts in excess of
     net income.  Net income is allocated to or from the General  Partner to the
     extent  necessary to cause the General  Partner's  capital account to equal
     zero. The General  Partner  allocated $0.1 million to the limited  partners
     during 2000.  The General  Partner  received an allocation in the amount of
     $0.2  million  and $0.4  million  from the  gross  gain on  disposition  of
     equipment for the years ended December 31, 1999 and 1998, respectively. The
     limited  partners' net income and  distributions  are  allocated  among the
     limited  partners  based on the number of  depositary  units  owned by each
     limited  partner and on the number of days of the year each limited partner
     is in the Partnership.

     Cash  distributions are recorded when paid. Cash distributions to investors
     in  excess  of  net  income  are  considered  a  return  of  capital.  Cash
     distributions  to the  limited  partners  of $0,  $3.8  million,  and  $7.5
     million,   for  the  years  ended  December  31,  2000,   1999,  and  1998,
     respectively, were deemed to be a return of capital.

     NET INCOME PER WEIGHTED-AVERAGE DEPOSITARY UNIT

     Net income per  weighted-average  depositary  unit was computed by dividing
     net income attributable to limited partners by the weighted-average  number
     of   depositary   units   deemed   outstanding   during  the  period.   The
     weighted-average  number of depositary units deemed  outstanding during the
     years ended December 31, 2000, 1999, and 1998 were 9,871,073.

     COMPREHENSIVE INCOME

     The  Partnership's  net  income was equal to  comprehensive  income for the
     years ended December 31, 2000, 1999, and 1998.

     CASH AND CASH EQUIVALENTS

     The  Partnership  considers  highly  liquid  investments  that are  readily
     convertible  into known amounts of cash with  original  maturities of three
     months or less to be cash equivalents.

     RESTRICTED CASH

     As of December  31,  2000,  restricted  cash  represented  lessee  security
     deposits held by the Partnership.

2.   GENERAL PARTNER AND TRANSACTIONS WITH AFFILIATES

     An  officer of FSI,  a  wholly-owned  subsidiary  of the  General  Partner,
     contributed $100 of the Partnership's initial capital.  Under the equipment
     management  agreement,  IMI,  subject  to  certain  reductions,  receives a
     monthly  management fee attributable to either owned equipment or interests
     in  equipment  owned by the USPEs  equal to the lesser of (a) the fees that
     would be charged by an  independent  third party for similar  services  for
     similar  equipment  or (b) the sum of (i) 5% of the  gross  lease  revenues
     attributable to equipment that is subject to operating  leases,  (ii) 2% of
     the gross lease revenues  attributable to equipment that is subject to full
     payout net leases, and (iii) 7% of the gross lease revenues attributable to
     equipment for which IMI provides both  management and  additional  services
     relating to the continued and active operation of program  equipment,  such
     as on-going marketing and re-leasing of equipment,  hiring or arranging for
     the or operating personnel for




                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


2.   GENERAL PARTNER AND TRANSACTIONS WITH AFFILIATES (CONTINUED)

     equipment,  and similar services.  The Partnership's  proportional share of
     USPE management fees of $10,000 and $12,000 were payable as of December 31,
     2000 and 1999, respectively.  The Partnership's proportional share of USPEs
     management  fee expense  during  2000,  1999,  and 1998 was  $36,000,  $0.1
     million, and $0.1 million, respectively. The Partnership reimbursed FSI and
     its  affiliates  $0.4  million,   $0.5  million,   and  $0.6  million,  for
     administrative  and data  processing  services  performed  on behalf of the
     Partnership in 2000, 1999, and 1998, respectively.

     The  Partnership's  proportional  share  of USPEs  administrative  and data
     processing  services  reimbursed  to FSI was $10,000,  $6,000,  and $26,000
     during 2000, 1999, and 1998, respectively.

     The Partnership  paid lease  negotiation and equipment  acquisition fees of
     $0.1  million  to TEC  during  1998.  No lease  negotiation  and  equipment
     acquisition fees were paid to TEC during 2000 or 1999.

     The  Partnership  owned certain  equipment in conjunction  with  affiliated
     programs (see Note 4).

     During  2000,  the  Partnership  borrowed a total of $4.6  million from the
     General Partner in addition to the $0.6 million outstanding on December 31,
     1999. The General Partner  charged the  Partnership  market interest rates.
     Total interest paid to the General Partner was $0.1 million. All borrowings
     were repaid by December 31, 2000.

     The balance due to affiliates as of December 31, 2000 included $0.1 million
     due to FSI and its  affiliates  for  management  fees.  The  balance due to
     affiliates as of December 31, 1999 included $0.1 million due to FSI and its
     affiliates for management fees and $0.6 million to FSI for the loan made to
     the Partnership.

3.   EQUIPMENT

     The  components  of owned  equipment  as of December 31, are as follows (in
     thousands of dollars):

       Equipment Held for Operating Leases:         2000              1999
                                                --------------------------------

       Rail equipment                           $   33,370         $   33,572
       Trailers                                      3,428              4,166
       Marine containers                             3,230              4,453
       Aircraft                                         --             42,000
                                                --------------------------------
                                                    40,028             84,191
       Less accumulated depreciation               (34,361)           (69,303)
                                                --------------------------------
                                                     5,667             14,888
       Equipment Held for Sale                       1,703                 --
                                                --------------------------------
         Net equipment                          $    7,370         $   14,888
                                                ================================


     Revenues are earned by placing the equipment  under operating  leases.  The
     Partnership's marine containers are leased to operators of utilization-type
     leasing pools,  which include equipment owned by unaffiliated  parties.  In
     such instances, revenues received by the Partnership consist of a specified
     percentage  of  revenues  generated  by  leasing  the pooled  equipment  to
     sublessees, after deducting certain direct operating expenses of the pooled
     equipment.  Rents for railcars are based on a fixed rates.  Lease  revenues
     for trailers that  operated in rental yards owned by PLM Rental,  Inc. were
     based on a fixed rate for a specific period of time.





                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000




3.   EQUIPMENT (CONTINUED)

     As of December 31, 2000, all owned equipment in the  Partnership  portfolio
     was on lease except for 88 railcars,  25 trailers,  and an aircraft.  As of
     December 31, 1999, all owned equipment in the Partnership  portfolio was on
     lease or operating  in  PLM-affiliated  short-term  trailer  rental  yards,
     except for 40 railcars,  and an aircraft.  The  aggregate net book value of
     equipment  off lease was $0.6  million and $1.2  million as of December 31,
     2000 and 1999, respectively.

     During  2000,  the  Partnership  sold or  disposed  of  marine  containers,
     trailers,  railcars,  and aircraft with an aggregate net book value of $2.8
     million for proceeds of $12.5 million.

     During  1999,  the  Partnership  sold or  disposed  of  marine  containers,
     trailers,  railcars,  and an aircraft  with an aggregate  net book value of
     $1.6 million for proceeds of $3.8 million.

     During  2000,   the   Partnership   entered  into  contracts  to  sell  the
     Partnership's 737-200 stage II and Dash 8-300 aircraft. Consequently, these
     two  aircraft are reported as assets held for sale as of December 31, 2000.
     There were no assets held for sale as of December 31, 1999.

     In the fourth quarter of 1996, the Partnership  ended its investment  phase
     in  accordance  with  the  limited  partnership  agreement;  therefore,  no
     equipment was purchased  during 2000,  1999, or 1998. The Partnership  made
     capital  improvements as required by lease  agreement to the  Partnership's
     existing  equipment of $0.2  million,  $26,000,  and $0.1 million were made
     during 2000, 1999, and 1998, respectively.

     All leases for owned equipment are being accounted for as operating leases.
     Per diem and  short-term  rentals  consisting  of  utilization  rate  lease
     payments included in revenue amounted to approximately  $0.2 million,  $0.3
     million, and $0.8 million in 2000, 1999, and 1998, respectively.

4.   INVESTMENTS IN UNCONSOLIDATED SPECIAL PURPOSE ENTITIES

     The Partnership owned equipment jointly with affiliated programs.

     In September  1999, the General Partner  amended the  corporate-by-laws  of
     certain USPEs in which the Partnership,  or any affiliated program, owns an
     interest greater than 50%. The amendment to the corporate-by-laws  provided
     that  all  decisions  regarding  the  acquisition  and  disposition  of the
     investment  as  well  as  other  significant  business  decisions  of  that
     investment   would  be  permitted  only  upon  unanimous   consent  of  the
     Partnership  and all the affiliated  programs that have an ownership in the
     investment.  As such,  although the Partnership may own a majority interest
     in a USPE,  the  Partnership  does not control its  management and thus the
     equity method of accounting  will be used after  adoption of the amendment.
     As a result of the  amendment,  as of September 30, 1999, all jointly owned
     equipment in which the  Partnership  owned a majority  interest,  which had
     been consolidated,  were reclassified to investments in USPEs. Accordingly,
     as of December 31, 2000,  the balance  sheet  reflects all  investments  in
     USPEs on an equity basis.

     The net investments in USPEs include the following  jointly-owned equipment
     (and related  assets and  liabilities)  as of December 31, (in thousands of
     dollars):

<TABLE>
<CAPTION>

                                                                                            2000           1999
                                                                                        -----------    -----------
            <S>                                                                         <C>            <C>
            56% interest in an entity that owned a bulk-carrier marine vessel           $       76     $    2,440
            25% interest in a trust that owned four 737-200 Stage II commercial
              aircraft                                                                          --             58
                                                                                        -----------    -------------
                Net investments                                                         $       76     $    2,498
                                                                                        ===========    ===========
</TABLE>




                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


4.   INVESTMENTS IN UNCONSOLIDATED SPECIAL PURPOSE ENTITIES (CONTINUED)

     During 2000, the Partnership  sold its 56% interest in an entity that owned
     a  bulk-carrier  marine  vessel and received  liquidation  proceeds of $3.2
     million for its net investment of $2.1 million.

     During 1999, the Partnership sold its 17% interest in two trusts that owned
     a total of three commercial aircraft, two aircraft engines, and a portfolio
     of aircraft rotables and received  liquidation proceeds of $3.5 million for
     its net investment of $1.9 million.

     As of December 31, 2000, the Partnership's remaining interest in the entity
     that owned a marine vessel  represents $0.1 million of receivables from the
     former lessee.

     The following  summarizes the financial  information  for the USPEs and the
     Partnership's  interests therein as of and for the years ended December 31,
     (in thousands of dollars):

<TABLE>
<CAPTION>
                                           2000                          1999                         1998
                                ---------------------------   ---------------------------   -------------------------
                                  Total        Net Interest     Total       Net Interest      Total      Net Interest
                                  USPEs            of           USPEs           Of            USPEs           of
                                               Partnership                  Partnership                  Partnership
                                ------------    -----------   ------------   ------------   -----------  ------------
<S>                            <C>             <C>            <C>            <C>           <C>           <C>
        Net investments        $       135     $       76     $    4,881     $    2,498    $    12,581   $    2,160
        Lease revenues               1,273            713          1,910            243          6,279        1,229
        Net income                   1,628            918          8,902          1,413          9,214           49
</TABLE>

5.   OPERATING SEGMENTS

     The Partnership  operates or operated primarily in six different  segments:
     aircraft leasing,  marine container leasing,  mobile offshore drilling unit
     (MODU)  leasing,  marine  vessel  leasing,  trailer  leasing,  and  railcar
     leasing.  Each equipment  leasing segment engages in short-term to mid-term
     operating leases to a variety of customers.

     The General  Partner  evaluates  the  performance  of each segment based on
     profit or loss from  operations  before  allocation of certain  general and
     administrative expenses,  interest expense, and certain other expenses. The
     segments are managed  separately due to different  business  strategies for
     each operation.




                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

5.   OPERATING SEGMENTS (CONTINUED)

     The  following  tables  present a summary  of the  operating  segments  (in
     thousands of dollars):
<TABLE>
<CAPTION>

                                                     MARINE
                                           AIRCRAFT  CONTAINER   MARINE   TRAILER    RAILCAR     ALL
     FOR THE YEAR ENDED DECEMBER 31, 2000  LEASING   LEASING     VESSEL   LEASING    LEASING    OTHER(1)    TOTAL
     ------------------------------------  -------   -------     ------   -------    -------    ------      -----
<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES

       Lease revenue                       $  3,867  $     80   $     --  $    560   $  6,591  $     --   $ 11,098
       Interest income and other                (18)       --         --        --         12       211        205
       Net gain on disposition of             9,460        62         --        79        106        --      9,707
     equipment
                                           ------------------------------------------------------------------------
         Total revenues                      13,309       142         --       639      6,709       211     21,010

     EXPENSES
       Operations support                       464         4         --       208      2,019        34      2,729
       Depreciation and amortization          2,784        72         --       255      1,633        29      4,773
       Interest expense                          --        --         --        --         --       306        306
       Management fee expense                   142         4         --        29        459        --        634
       General and administrative expenses      251         1         --       100        267       861      1,480
       Revaluation of equipment                  --        --         --       202         --        --        202
       Provision for (recovery of) bad           --        --         --        (7)       (87)       --        (94)
       debts
                                           ------------------------------------------------------------------------
         Total costs and expenses             3,641        81         --       787      4,291     1,230     10,030
     Equity in net income of USPEs               23        --        895        --         --        --        918
                                           ------------------------------------------------------------------------
                                           ------------------------------------------------------------------------
     Net income (loss)                     $  9,691  $     61   $    895  $   (148 ) $  2,418  $ (1,019 ) $ 11,898
                                           ========================================================================

     AS OF DECEMBER 31, 2000
     Total assets                          $  1,837  $    149   $     76  $    965   $  5,135  $  1,875   $ 10,037
                                           ========================================================================
<FN>
(1) Includes  certain interest income and costs not identifiable to a particular
segment such as interest and amortization expense and certain operations support
and general and administrative expenses.
</FN>
</TABLE>


<TABLE>
<CAPTION>
                                                     MARINE
                                           AIRCRAFT  CONTAINER   MARINE   TRAILER    RAILCAR     ALL
     FOR THE YEAR ENDED DECEMBER 31, 1999  LEASING   LEASING     VESSEL   LEASING    LEASING    OTHER(1)    TOTAL
     ------------------------------------  -------   -------     ------   -------    -------    ------      -----
<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES

       Lease revenue                       $  5,632  $    120   $  1,477  $    741   $  6,882  $     --   $ 14,852
       Interest income and other                 47        --         45        --        170       183        445
       Net gain (loss) on disposition of
         Equipment                            1,760        96         --       (42)       383        --      2,197
                                           ------------------------------------------------------------------------
         Total revenues                       7,439       216      1,522       699      7,435       183     17,494

     EXPENSES
       Operations support                       656         2        817       229      1,782        38      3,524
       Depreciation and amortization          4,693       114        643       344      1,766        68      7,628
       Interest expense                          --        --         --        --         --     1,021      1,021
       Management fee expense                   213         6         75        41        472        --        807
       General and administrative expenses      419         4         45       132        270       732      1,602
       Provision for (recovery of) bad          222        --         --       (15)       101        --        308
       debts
                                           ------------------------------------------------------------------------
         Total costs and expenses             6,203       126      1,580       731      4,391     1,859     14,890
                                           ------------------------------------------------------------------------
       Minority interests                        --        --         --        --         --       (22)       (22)
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs     1,477        --        (64)       --         --        --      1,413
                                           ------------------------------------------------------------------------
                                           ------------------------------------------------------------------------
     Net income (loss)                     $  2,713  $     90   $   (122) $    (32)  $  3,044  $ (1,654)  $  4,039
                                           ========================================================================

     AS OF DECEMBER 31, 1999
     Total assets                          $  6,954  $    325   $  2,443  $  1,738   $  6,588  $    642   $ 18,690
                                           ========================================================================
<FN>
(1)Includes  certain  interest income and costs not identifiable to a particular
segment such as interest and amortization expense and certain operations support
and general and administrative expenses.
</FN>
</TABLE>






                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

5.   OPERATING SEGMENTS (CONTINUED)
<TABLE>
<CAPTION>

                                                      MARINE
                                           AIRCRAFT  CONTAINER    MODU    TRAILER    RAILCAR     ALL
     FOR THE YEAR ENDED DECEMBER 31, 1998  LEASING   LEASING    LEASING   LEASING    LEASING    OTHER(1)    TOTAL
     ------------------------------------  -------   -------    -------   -------    -------    ------      -----
<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES

       Lease revenue                       $  6,471  $    278   $    756  $  1,256   $  7,144  $  2,508   $ 18,413
       Interest income and other                 23        --         --        --         78       185        286
       Net gain (loss) on disposition of
         equipment                              (14 )      60      3,619      (123)       266        --      3,808
                                           ------------------------------------------------------------------------
         Total revenues                       6,480       338      4,375     1,133      7,488     2,693     22,507

     EXPENSES
       Operations support                     1,321         6         18       221      2,376     1,345      5,287
       Depreciation and amortization          6,240       240        512       496      1,849     1,124     10,461
       Interest expense                          --        --         --        --         --     1,706      1,706
       Management fee                           298        14         38        77        497       125      1,049
       General and administrative expenses      211         5          6       186        285       757      1,450
       Provision for (recovery of) bad         (358)       --         --        44        (22)        1       (335)
       debts
                                           ------------------------------------------------------------------------
         Total costs and expenses             7,712       265        574     1,024      4,985     5,058     19,618
                                           ------------------------------------------------------------------------
       Minority interests                        --        --         --        --         --        21         21
                                           ------------------------------------------------------------------------
     Equity in net income of USPEs               49        --         --        --         --        --         49
                                           ------------------------------------------------------------------------
                                           ------------------------------------------------------------------------
     Net income (loss)                     $ (1,183) $     73   $  3,801  $    109   $  2,503  $ (2,386)  $  2,917
                                           ========================================================================

     AS OF DECEMBER 31, 1998
     Total assets                          $ 14,788  $    512   $     --  $  2,148   $  8,072  $  9,992   $ 35,512
                                           ========================================================================
<FN>
(1) Includes  certain interest income and costs not identifiable to a particular
segment such as interest and amortization expense and certain operations support
and general and administrative expenses.
</FN>
</TABLE>


6.   GEOGRAPHIC INFORMATION

     The  Partnership  owns  certain  equipment  that  is  leased  and  operated
     internationally.  A limited number of the  Partnership's  transactions  are
     denominated in a foreign  currency.  Gains or losses resulting from foreign
     currency transactions are included in the results of operations and are not
     material.

     The Partnership  leases or leased its aircraft,  railcars,  and trailers to
     lessees domiciled in four geographic  regions:  the United States,  Canada,
     Europe,  and Asia. The marine vessels,  mobile offshore  drilling unit, and
     marine  containers are leased to multiple lessees in different regions that
     operate this equipment worldwide.

     The table  below set forth  lease  revenue  by  geographic  region  for the
     Partnership's  owned equipment and investments in USPEs grouped by domicile
     of the lessee as of and for the years ended  December 31, (in  thousands of
     dollars):

<TABLE>
<CAPTION>

           Region                       Owned Equipment                    Investments in USPEs
-----------------------------  -----------------------------------  -----------------------------------
                                   2000        1999        1998         2000        1999        1998
                               -----------------------------------  -----------------------------------
<S>                            <C>         <C>              <C>     <C>         <C>          <C>
United States                  $    2,513  $    3,651       4,917   $       --  $       --   $      --
Canada                              6,364       6,768       6,257           --          --         449
Europe                              2,141       2,836       2,836           --          --         780
Asia                                   --          --         861           --          --          --
Rest of the world                      80       1,597       3,542          713         243          --
                               -----------------------------------  -----------------------------------
   Lease revenues              $   11,098  $   14,852      18,413   $      713  $      243   $   1,229
                               ===================================  ===================================
</TABLE>





                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


6.   GEOGRAPHIC INFORMATION (CONTINUED)

     The following table sets forth net income (loss)  information by region for
     the owned  equipment and  investments in USPEs for the years ended December
     31, (in thousands of dollars):

<TABLE>
<CAPTION>
           Region                       Owned Equipment                    Investments in USPEs
-----------------------------  -----------------------------------  -----------------------------------
                                   2000        1999        1998         2000        1999        1998
                               -----------------------------------  -----------------------------------
<S>                            <C>         <C>              <C>     <C>         <C>          <C>
United States                  $   (1,021) $      (64)      1,513   $       --  $       --   $      --
Canada                              8,642       4,375       1,384           23       1,477          10
Europe                              5,921         621        (379)          --          --          39
Asia                               (1,530)     (1,627)     (1,138)          --          --          --
Rest of the world                      61          38       3,836          895         (64)         --
                               -----------------------------------  -----------------------------------
Regional income (loss)             12,073       3,343       5,216          918       1,413          49
Administrative and other
net loss                           (1,093)       (717)     (2,348)          --          --          --
                               -----------------------------------  -----------------------------------
     Net income                 $  10,980  $    2,626       2,868   $      918  $    1,413   $      49
                               ===================================  ===================================
</TABLE>

The net book  value of these  assets as of  December  31,  were as  follows  (in
thousands of dollars):

<TABLE>
<CAPTION>

           Region                       Owned Equipment                    Investments in USPEs
-----------------------------  -----------------------------------  -----------------------------------
                                   2000        1999        1998         2000        1999        1998
                               -----------------------------------  -----------------------------------
<S>                            <C>         <C>              <C>     <C>         <C>          <C>
United States                  $    2,694  $    3,321       6,475   $       --  $       --   $      --
Europe                                 --       3,020       7,258           --          --       2,054
Canada                              4,454       7,227       7,114           --          58         106
Asia                                  150       1,051       1,951           --          --          --
Rest of the world                      72         269       5,584           76       2,440          --
                               -----------------------------------  -----------------------------------
    Net book value             $    7,370  $   14,888      28,382   $       76  $    2,498   $   2,160
                               ===================================  ===================================
</TABLE>

7.   NOTE PAYABLE

     The Partnership had a note  outstanding for $7.5 million as of December 31,
     1999, with interest computed at LIBOR plus 1.5% per annum. During 2000, the
     Partnership repaid this loan in accordance with the terms of the facility.

8.   CONCENTRATIONS OF CREDIT RISK

     No single lessee accounted for more than 10% of total consolidated revenues
     for the year ended December 31, 2000, 1999, and 1998. However, BCI Aircraft
     Leasing,  Inc. purchased two Boeing 737's from the Partnership and the gain
     from the sale  accounted for 33%, of total  consolidated  revenues from the
     wholly-and  partially-owned  equipment  during 2000. R & B Falcon Drilling,
     Inc. purchased a mobile offshore drilling unit from the Partnership and the
     gain from the sale  accounted for 15% of total  consolidated  revenues from
     wholly-and partially-owned equipment during 1998.

     As of  December  31,  2000 and  1999,  the  General  Partner  believes  the
     Partnership  had no  significant  concentrations  of credit risk that could
     have a material adverse effect on the Partnership.

9.   INCOME TAXES

     The  Partnership  is not subject to income taxes,  as any income or loss is
     included in the tax returns of the  individual  partners.  Accordingly,  no
     provision for income taxes has been made in the financial statements of the
     Partnership.



                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

9.   INCOME TAXES (CONTINUED)

     As of December 31, 2000, the financial  statement carrying amount of assets
     and  liabilities  was  approximately  $22.6  million lower than the federal
     income  tax  basis  of  such  assets  and  liabilities,  primarily  due  to
     differences in depreciation methods, equipment reserves,  provision for bad
     debt, prepaid deposits,  and the tax treatment of underwriting  commissions
     and syndication costs.

10.  CONTINGENCIES

     The  Partnership,  together with  affiliates,  has initiated  litigation in
     various official forums in India against a defaulting Indian airline lessee
     to repossess Partnership property and to recover damages for failure to pay
     rent and failure to maintain  such  property in  accordance  with  relevant
     lease  contracts.  The  Partnership  has  repossessed  all of its  property
     previously leased to such airline,  and the airline has ceased  operations.
     In response to the  Partnership's  collection  efforts,  the airline  filed
     counter-claims  against  the  Partnership  in excess  of the  Partnership's
     claims against the airline. The General Partner believes that the airline's
     counter claims are completely  without merit,  and the General Partner will
     vigorously defend against such counter claims. The General Partner believes
     the likelihood of an unfavorable outcome from the counter claims is remote.

11.  LIQUIDATION OF PARTNERSHIP

     During the first quarter of 2000, the  Partnership  completed its 11th year
     of  operations.  The General  Partner filed a certificate of dissolution on
     behalf  of the  Partnership  with the  Secretary  of State for the State of
     California  on  December  22,  2000,   and  following   completion  of  the
     liquidation of the  Partnership  which is anticipated to occur in 2001, the
     General  Partner  will file a  certificate  of  cancellation.  The  General
     Partner is actively  marketing the remaining  equipment  portfolio with the
     intent of  maximizing  sale  proceeds.  As sale  proceeds  are received the
     General Partner intends to periodically  declare special  distributions  to
     distribute the sale proceeds to the partners.  During the liquidation phase
     of  the  Partnership,  the  equipment  will  continue  to be  leased  under
     operating  leases  until sold.  Operating  cash  flows,  to the extent they
     exceed Partnership  expenses,  will continue to be distributed from time to
     time to partners.  The amounts  reflected for assets and liabilities of the
     Partnership  have not been  adjusted  to reflect  liquidation  values.  The
     equipment  portfolio  continues to be reported at the lower of  depreciated
     cost of fair value less cost to dispose.  Any excess proceeds over expected
     Partnership  obligations will be distributed to the Partners throughout the
     liquidation  period.  Upon  final  liquidation,  the  Partnership  will  be
     dissolved.

12.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

     The following is a summary of the quarterly  results of operations  for the
     years ended  December 31, 2000 (in  thousands of dollars,  except per share
     amounts):

<TABLE>
<CAPTION>
                                      March        June         September         December
                                       31,          30,            30,               31,            Total
                                   ----------------------------------------------------------------------------
     <S>                           <C>          <C>            <C>                <C>              <C>
      Operating results:
        Total revenues             $   3,205    $   3,050      $    12,664        $    2,091       $   21,010
        Net income (loss)                551    $     213           11,433              (299)          11,898

      Per weighted-average depositary unit:

      Limited Partners
        net income (loss)          $    0.05    $    0.02  $          1.16        $     (0.08)     $     1.15
</TABLE>




                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

12.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED)

     The following is a summary of the quarterly  results of operations  for the
     years ended  December 31, 1999 in  thousands  of dollars,  except per share
     amounts):
<TABLE>
<CAPTION>

                                      March        June         September         December
                                       31,          30,            30,               31,           Total
                                   ---------------------------------------------------------------------
<S>                                 <C>          <C>           <C>               <C>          <C>
      Operating results:
        Total revenues              $   3,985    $    4,407    $   3,944         $   5,158    $   17,494
        Net income (loss)               1,700           727         (216)            1,828         4,039

      Per weighted-average depositary unit:

      Limited Partners'
        net income (loss)           $    0.16    $     0.06    $    (0.03)       $    0.18    $     0.37
</TABLE>

13.  SUBSEQUENT EVENT

     On January 04, 2001, the General Partner for the Partnership announced that
     it has  begun  recognizing  transfers  involving  trading  of  units in the
     partnership  for the 2001 calendar year.  The  Partnership is listed on the
     OTC Bulletin Board under the symbols GFZPZ.

     In  February  2001,  PLM  International,  the  parent  of the  Partnership,
     announced that MILPI  Acquisition  Corp.  (MILPI) completed its cash tender
     offer for the outstanding common stock of PLM International. To date, MILPI
     has acquired 83% of the common shares outstanding.  MILPI will complete its
     acquisition  of PLM  International  by effecting a merger of MILPI into PLM
     International  under  Delaware  law. The merger is expected to be completed
     after  MILPI  obtains  approval  of  the  merger  by  PLM   International's
     shareholders  pursuant to a special shareholders' meeting which is expected
     to be held during the first half of 2001.

     During  February 2001,  the  Partnership  sold a Boeing 737-200  commercial
     aircraft  with a net book value of $0.2 million for $2.3 million  which was
     an asset held for sale as of December 31, 2000.






                          INDEPENDENT AUDITORS' REPORT



The Partners
PLM Equipment Growth Fund III:


Under date of March 2, 2001, we reported on the balance  sheets of PLM Equipment
Growth Fund III as of December 31, 2000 and 1999, and the related  statements of
income,  changes in partners'  capital,  and cash flows for each of the years in
the  three-year  period ended December 31, 2000, as contained in the 2000 annual
report to  stockholders.  These financial  statements and our report thereon are
incorporated  by reference in the annual  report on Form 10-K for the year 2000.
In connection with our audits of the  aforementioned  financial  statements,  we
also  audited  the  related  financial  statement  schedule  as  listed  in  the
accompanying  index. 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 financial statement 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.






San Francisco, CA
March 2, 2001


                                   SCHEDULE II


                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                        VALUATION AND QUALIFYING ACCOUNTS

                  YEAR ENDED DECEMBER 31, 2000, 1999, AND 1998
                            (in thousands of dollars)
<TABLE>
<CAPTION>

                                                                       Additions
                                             Balance at          Charged to                          Balance at
                                            Beginning of          Cost and                            Close of
                                                Year               Expense           Deductions         Year
                                           ----------------    ----------------     --------------  -------------
<S>                                        <C>                <C>                   <C>             <C>
  Year Ended December 31, 2000
       Allowance for Doubtful Accounts     $      1,757       $           --        $    (1,302)    $      455
                                           ======================================================================

  Year Ended December 31, 1999
       Allowance for Doubtful Accounts     $      1,469       $          308        $       (20)    $    1,757
                                           ======================================================================

  Year Ended December 31, 1998
       Allowance for Doubtful Accounts     $      1,834       $           --        $      (365)    $    1,469
                                           ======================================================================

</TABLE>




                          PLM EQUIPMENT GROWTH FUND III

                                INDEX OF EXHIBITS



  EXHIBIT                                                                   PAGE

    4.     Limited Partnership Agreement of Partnership.                      *

    4.1    Amendment, dated November 18, 1991, to Limited Partnership         *
           Agreement of Partnership.

   10.1    Management Agreement between Partnership and PLM Investment        *
           Management, Inc.

   24.     Powers of Attorney.                                             44-46

           Financial Statements required under Regulation S-X Rule 3-09:

  99.1     TAP Trust


----------
* Incorporated by reference. See page 22 of this report.