UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               -------------------
                                    FORM 10-Q


[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 For the fiscal quarter ended March 31, 1998

[  ] 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 ______




<PAGE>




                          PLM EQUIPMENT GROWTH FUND III

                             (A Limited Partnership)
                                 BALANCE SHEETS
                 (in thousands of dollars, except unit amounts)

<TABLE>
<CAPTION>


                                                                                         March 31,        December 31,
                                                                                           1998               1997
                                                                                      --------------------------------------
<S>                                                                                    <C>                   <C>        
Assets

Equipment held for operating leases, at cost                                           $     104,563         $   105,308
Less accumulated depreciation                                                                (69,081 )           (67,234 )
                                                                                     ---------------------------------------
    Net equipment                                                                             35,482              38,074

Cash and cash equivalents                                                                      4,230               4,239
Accounts and notes receivable, net of allowance for
    doubtful accounts of $1,950 in 1998 and $1,837 in 1997                                       717               1,316
Investments in unconsolidated special-purpose entities                                         7,442               9,179
Prepaid expenses                                                                                  46                  71
Deferred charges, net of accumulated amortization of
    $383 in 1998 and $348 in 1997                                                                266                 307

      Total assets                                                                     $      48,183         $    53,186
                                                                                     =======================================

Liabilities and partners'capital


Liabilities:
Accounts payable and accrued expenses                                                  $         794         $     1,294
Due to affiliates                                                                                128               2,208
Lessee deposits and reserves for repairs                                                         929                 835
Note payable                                                                                  29,290              29,290
                                                                                     ---------------------------------------
    Total liabilities                                                                         31,141              33,627
                                                                                     ---------------------------------------

Partners' capital:
Limited partners (9,871,073 depositary units as of
    March 31, 1998 and as of December 31, 1997)                                               17,042              19,559
General Partner                                                                                   --                  --
    Total partners' capital                                                                   17,042              19,559

      Total liabilities and partners' capital                                          $      48,183         $    53,186
                                                                                     =======================================

</TABLE>












                       See accompanying notes to financial
                                  statements.


<PAGE>




                          PLM EQUIPMENT GROWTH FUND III
                            (A Limited Partnership)
                            STATEMENTS OF OPERATIONS
        (in thousands of dollars, except weighted-average unit amounts)

<TABLE>
<CAPTION>

                                                                                             For the Three Months
                                                                                               Ended March 31,
                                                                                              1998          1997
                                                                                          --------------------------

<S>                                                                                         <C>              <C>      
Revenues

Lease revenue                                                                               $    4,282       $   4,991
Interest and other income                                                                           59              95
Net gain (loss) on disposition of equipment                                                        (10)             90
                                                                                          -------------------------------
    Total revenues                                                                               4,331           5,176
                                                                                          -------------------------------

Expenses

Depreciation and amortization                                                                    2,395           3,556
Management fees to affiliate                                                                       242             293
Repairs and maintenance                                                                            570           1,415
Equipment operating expenses                                                                        40               7
Interest expense                                                                                   529             796
Insurance expense                                                                                   83              45
General and administrative expenses to affiliates                                                  155             182
Other general and administrative expenses                                                          105             144
Provision for (recovery of) bad debt expense                                                       127             (25)
                                                                                          -------------------------------
    Total expenses                                                                               4,246           6,413
                                                                                          -------------------------------

Equity in net income (loss) of unconsolidated special-purpose entities                              (5)            185
                                                                                          -------------------------------
      Net income (loss)                                                                     $       80       $  (1,052)
                                                                                          ===============================

Partners' share of net income (loss)

Limited partners                                                                            $      (50)      $  (1,182)
General Partner                                                                                    130             130
                                                                                          -------------------------------
      Total                                                                                 $       80       $  (1,052)
                                                                                          ===============================

Net loss per weighted-average depositary unit (9,871,073 units as of
      March 31, 1998 and March 31, 1997)                                                    $    (0.01)      $   (0.12)
                                                                                          ===============================

Cash distribution                                                                           $    2,597       $   2,598
                                                                                          ===============================

Cash distribution per weighted-average depositary unit                                      $     0.25       $    0.25
                                                                                          ===============================


</TABLE>








                       See accompanying notes to financial
                                  statements.


<PAGE>




                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                       STATEMENTS OF CHANGES IN PARTNERS'
                  CAPITAL For the Period from December 31, 1996
                                to March 31, 1998
                           (in thousands of dollars)

<TABLE>
<CAPTION>


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

<S>                                                    <C>                 <C>              <C>       
Partners' capital as of December 31, 1996              $   28,013          $    --          $   28,013

Net income                                                  1,417              520               1,937

Cash distribution                                          (9,871)            (520)            (10,391)
                                                     -----------------------------------------------------

Partners' capital as of December 31, 1997                  19,559               --              19,559

Net income (loss)                                             (50)             130                  80

Cash distribution                                          (2,467)            (130)             (2,597)
                                                     -----------------------------------------------------

Partners' capital as of March 31, 1998                 $   17,042          $    --          $   17,042
                                                     =====================================================

</TABLE>

































                       See accompanying notes to financial
                                  statements.


<PAGE>




                          PLM EQUIPMENT GROWTH FUND III
                            (A Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                           (in thousands of dollars)
<TABLE>
<CAPTION>


                                                                                               For the Three Months
                                                                                                  Ended March 31,
                                                                                                1998           1997
                                                                                            ---------------------------
<S>                                                                                          <C>              <C>        
Operating activities

Net income (loss)                                                                            $       80       $   (1,052)
Adjustments to reconcile net income (loss) to net cash
    provided by (used in) operating activities:
  Depreciation and amortization                                                                   2,395            3,556
  Net (gain) loss on disposition of equipment                                                        10              (90)
  Equity in net (income) loss from unconsolidated special-purpose entities                            5             (185)
  Changes in operating assets and liabilities:
    Restricted cash                                                                                  --              (77)
    Accounts and notes receivable, net                                                              599               25
    Prepaid expenses                                                                                 25               18
    Accounts payable and accrued expenses                                                          (500 )           (458)
    Due to affiliates                                                                              (288 )           (201)
    Lessee deposits and reserves for repairs                                                         94             (127)
                                                                                            -------------------------------
      Net cash provided by operating activities                                                   2,420            1,409
                                                                                            -------------------------------

Investing activities

Payments for capitalized repairs                                                                    (26 )             (5)
Distributions from unconsolidated special-purpose entities                                        1,732            1,751
Proceeds from disposition of equipment                                                              254              375
                                                                                            -------------------------------
      Net cash provided by investing activities                                                   1,960            2,121
                                                                                            -------------------------------

Financing activities

Principal repayments under notes payable                                                             --             (319)
Payment due to affiliates                                                                        (1,792 )             --
Cash distribution paid to General Partner                                                          (130 )           (130)
Cash distribution paid to limited partners                                                       (2,467 )         (2,468)
                                                                                            -------------------------------
      Net cash used in financing activities                                                      (4,389 )         (2,917)
                                                                                            -------------------------------

Net increase (decrease) in cash and cash equivalents                                                 (9 )            613
Cash and cash equivalents at beginning of period                                                  4,239            1,414
                                                                                            -------------------------------
Cash and cash equivalents at end of period                                                   $    4,230       $    2,027
                                                                                            ===============================

Supplemental information
Interest paid                                                                                $      529       $    1,016
                                                                                            ===============================
</TABLE>









                       See accompanying notes to financial
                                  statements.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 1998


1.   Opinion of Management

In the opinion of the management of PLM Financial  Services,  Inc. (FSI), or the
General Partner,  the accompanying  unaudited  financial  statements contain all
adjustments  necessary,  consisting  primarily of normal recurring accruals,  to
present  fairly the  financial  position of PLM  Equipment  Growth Fund III (the
Partnership)  as of March 31, 1998 and  December  31, 1997,  the  statements  of
operations and the statements of cash flows for the three months ended March 31,
1998 and 1997, and the statement of changes in partners'  capital for the period
from  December  31,  1996 to  March  31,  1998.  Certain  information  and  note
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles  have been condensed or omitted
from the accompanying financial statements.  For further information,  reference
should be made to the financial  statements  and notes  thereto  included in the
Partnership's  Annual Report on Form 10-K for the year ended  December 31, 1997,
on file with the Securities and Exchange Commission.

2.   Cash Distributions

Cash distributions are recorded when paid and totaled $2.6 million for the three
months  ended March 31, 1998 and 1997.  Cash  distributions  to  unitholders  in
excess of net income are  considered  to  represent  a return of  capital.  Cash
distributions to unitholders of $2.5 million during the three months ended March
31, 1998 and 1997 were deemed to be a return of capital.

Cash distributions of $0.25 per depositary unit were declared on April 24, 1998,
and are to be paid on May 15, 1998 to the  unitholders of record as of March 31,
1998. These cash distributions will amount to $2.6 million.

3.   Transactions with General Partner and Affiliates

Partnership  management fees payable to an affiliate of the General Partner were
$0.1  million  and $0.4  million as of March 31,  1998 and  December  31,  1997,
respectively. The Partnership's proportional share of affiliated management fees
with unconsolidated special-purpose entities (USPEs) of $21,000 and $0.1 million
were payable as of March 31, 1998 and December 31, 1997, respectively.

The Partnership's  proportional share of the affiliated expenses incurred by the
USPEs during 1998 and 1997,  is listed in the  following  table (in thousands of
dollars):

<TABLE>
<CAPTION>

                                                                  For the Three Months
                                                                    Ended March 31,
                                                                 1998             1997
                                                            --------------------------------

<S>                                                           <C>              <C>      
Management fees                                               $      28        $      43
Data processing and administrative expenses                          15               11
Insurance expense                                                     2               27

</TABLE>

Transportation  Equipment  Indemnity  Company,  Ltd.  (TEI), an affiliate of the
General Partner,  provides marine insurance  coverage for Partnership  equipment
and other insurance brokerage  services.  TEI did not provide the same insurance
coverage  during 1998 as had been provided for during 1997.  These services were
provided by an unaffiliated third party.


<PAGE>






                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 1998

4.    Equipment

The components of owned  equipment held for operating  leases are as follows (in
thousands of dollars):

<TABLE>
<CAPTION>

                                                                March 31,          December 31,
                                                                  1998                 1997
                                                              -----------------------------------

<S>                                                            <C>                    <C>       
Aircraft and aircraft engines                                  $    46,282            $   46,282
Rail equipment                                                      34,862                34,859
Mobile offshore drilling unit                                        9,666                 9,666
Marine containers                                                    7,080                 7,421
Trailers                                                             6,673                 7,080
                                                                   104,563               105,308
Less accumulated depreciation                                      (69,081)              (67,234 )
                                                              ---------------------------------------
    Net equipment                                              $    35,482            $   38,074
                                                              =======================================
</TABLE>

As of March 31, 1998, all equipment in the  Partnership  portfolio was either on
lease or operating in PLM-affiliated short-term trailer rental facilities,  with
the exception of 51 railcars and 25 marine containers with an aggregate carrying
value of $0.3 million. As of December 31, 1997, all equipment in the Partnership
portfolio was either on lease or operating in  PLM-affiliated  short-term rental
facilities,  with the exception of 28 marine  containers and 41 railcars with an
aggregate carrying value of $0.3 million.

During the three months ended March 31, 1998, the  Partnership  sold or disposed
of marine containers,  trailers, and a railcar, with an aggregate net book value
of $0.3  million for  proceeds of $0.3  million.  During the three  months ended
March 31,  1997,  the  Partnership  sold or  disposed of marine  containers  and
railcars,  with an aggregate net book value of $0.3 million for proceeds of $0.4
million.

5.   Investments in Unconsolidated Special-purpose Entities (USPE)

The net investment in USPEs includes the following  jointly-owned equipment (and
related assets and liabilities) (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                                March 31,      December 31,
                                      Equipment                                   1998            1997
-----------------------------------------------------------------------------------------------------------
  <S>                                                                          <C>             <C>       
  56%   interest in an entity owning a marine vessel                           $    3,002      $    3,104
  17%   Interest in two trusts that own three commercial aircraft, two
          aircraft engines, and a portfolio of rotable components                   2,547           4,021
  50%   interest in a trust that owns two commercial aircraft                       1,893              --
  25%   interest in a trust that owns four commercial aircraft                         --           2,054
        Net investments                                                        $    7,442      $    9,179
                                                                              =============================
</TABLE>

The  Partnership  has an interest  in a USPE that owns  multiple  aircraft  (the
Trust).  This  Trust  contains  provisions,  under  certain  circumstances,  for
allocating specific aircraft to the beneficial owners.  During the first quarter
of  1998,  PLM  Equipment  Growth  &  Income  Fund  VII and  Professional  Lease
Management Income Fund I, LLC, both affiliated programs,  each sold the aircraft
designated to it. The result for the Partnership was to restate the ownership in
the Trust  from 25% to 50%.  This  change  had no  effect on the  income or loss
recognized during the first quarter of 1998.

6,    Subsequent Event

During May 1998, the Partnership  increased its investment in the USPE that owns
two commercial aircraft by funding the installation of a hushkit to the aircraft
assigned to it at a cost of $1.2 million.




<PAGE>




Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

(I)  RESULTS OF OPERATIONS

Comparison  of the  Partnership's  Operating  Results for the Three Months Ended
March 31, 1998 and 1997

Owned Equipment Operations

Lease  revenues  less  direct  expenses  (repairs  and  maintenance,   equipment
operating expense,  and asset-specific  insurance) on owned equipment  increased
for the quarter  ended March 31, 1998 when  compared to the same period of 1997.
The following  table presents  results by owned  equipment type (in thousands of
dollars):

<TABLE>
<CAPTION>

                                                    For the Three Months
                                                       Ended March 31,

                                                    1998                1997
                      ------------------------------------------------------------
<S>                                           <C>                <C>             
Aircraft and aircraft engines                 $         1,557    $            904
Rail equipment                                          1,312               1,533
Mobile offshore drilling unit                             395                 398
Trailers                                                  265                 400
Marine containers                                         116                 301
Marine vessels                                             --                  (4)

</TABLE>


Aircraft and aircraft engines:  Aircraft lease revenues and direct expenses were
$1.6 million and $0.1  million,  respectively,  for the quarter  ended March 31,
1998, compared to $1.9 million and $1.0 million,  respectively,  during the same
period of 1997.  Lease  revenues  decreased $0.3 million during the three months
ended March 31, 1998,  when  compared to the same period in 1997 due to the sale
of two aircraft during the third and fourth  quarters of 1997.  During the three
months ended March 31, 1997, the Partnership incurred $1.0 million in repairs on
one aircraft to prepare it for re-lease; a similar expense was not needed during
the same period of 1998.

Rail equipment: Railcar lease revenues and direct expenses were $1.8 million and
$0.5 million,  respectively,  for the quarter ended March 31, 1998,  compared to
$1.9 million and $0.3 million, respectively, during the same period of 1997. The
increase in direct expenses  resulted from running  repairs  required on certain
railcars  in the fleet  during  the first  quarter  of 1998 that were not needed
during the first  quarter of 1997.  Additionally,  there was a decrease in lease
revenues due to more  railcars  being off lease during the first quarter of 1998
when  compared  to the  first  quarter  of 1997 and to the  disposition  of rail
equipment during 1998 and 1997.

Mobile offshore  drilling unit: Mobile offshore drilling unit lease revenues and
direct  expenses  were $0.4 million and $10,000,  respectively,  for the quarter
ended March 31, 1998, compared to $0.4 million and $7,000  respectively,  during
the same period of 1997

Trailers:  Trailer lease revenues and direct expenses were $0.3 million and $0.1
million,  respectively,  for the quarter ended March 31, 1998,  compared to $0.5
million and $0.1  million,  respectively,  during the same  period of 1997.  The
number of trailers owned by the  Partnership has been declining due to sales and
dispositions.  The  result of this  declining  fleet is a  decrease  in  trailer
contribution.

Marine containers: Marine container lease revenues and direct expenses were $0.1
million and $2,000, respectively, for the quarter ended March 31, 1998, compared
to $0.3 million and $3,000,  respectively,  during the same period of 1997.  The
number of marine  containers  owned by the Partnership has been declining due to
sales and  dispositions.  The result of this  declining  fleet is a decrease  in
marine container contribution.

(B)      Indirect Operating Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $3.6  million for the quarter  ended March 31, 1998
decreased from $4.9 million for the same period of 1997.  Significant  variances
are explained as follows:

     (1) A decrease of $1.2 million in  depreciation  and  amortization  expense
from 1997 levels reflects the sale of certain equipment during 1998 and 1997 and
the double-declining balance method of depreciation.

     (2) A decrease of $0.3 million in interest expense was due to lower average
debt  outstanding  during the three months ended March 31, 1998 when compared to
the same period of 1997.

     (3) An increase of $0.2 million in bad debt expense primarily  reflects the
Partnership's evaluation of the collectibility of certain receivable balances.

(C)      Net Gain (Loss) on Disposition of Owned Equipment

The net loss on the disposition of owned equipment for the first quarter of 1998
totaled  $10,000  and  resulted  from  the  disposition  of  marine  containers,
trailers,  and a railcar,  with an aggregate net book value of $0.3 million, for
aggregate  proceeds of $0.3  million.  The net gain of $0.1 million in the first
quarter of 1997 resulted from the disposition of marine containers and railcars,
with an aggregate net book value of $0.3 million for aggregate  proceeds of $0.4
million.

(D) 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 equipment  type
(in thousands of dollars):

                                             For the Three Months
                                                 Ended March 31,

                                                1998         1997
                                            ------------------------
Aircraft, aircraft engines, and rotables      $     73    $     216
Marine vessel                                      (78)         (31)
                                            ------------------------
  Equity in net income (loss) of USPEs        $     (5)   $     185
                                            ========================

Aircraft and aircraft engines, and rotables: The Partnership's share of aircraft
revenues and expenses was $0.5 million and $0.4 million,  respectively,  for the
quarter  ended  March 31,  1998,  compared  to $0.7  million  and $0.5  million,
respectively,  during  the same  period  of  1997.  As of March  31,  1998,  the
Partnership  had a beneficial  interest in three trusts that own five commercial
aircraft, two aircraft engines, and a package of aircraft rotables. The decrease
in lease  revenues  was due to the  renewal of the  leases for three  commercial
aircraft,  two aircraft engines, and a portfolio of aircraft rotables at a lower
rate than was in place  during the same  period of 1997.  The  decrease in lease
revenues   was   partially   offset  by  lower   direct   expenses  due  to  the
double-declining balance method of depreciation.

Marine  vessel:  The  Partnership's  share of  revenues  and  expenses  from the
interest in an entity  owning a marine vessel was $0.3 million and $0.4 million,
respectively, for the quarter ended March 31, 1998, compared to $0.3 million and
$0.4  million,  respectively,  for the same  period  in 1997.  The  decrease  in
contribution  was due to lower lease rates earned  during the three months ended
March 31, 1998, when compared to the same period of 1997.

(E) Net Income (Loss)

As a result of the foregoing,  the  Partnership's  net income of $0.1 million in
the first  quarter of 1998  compared to a net loss of $1.1  million in the first
quarter of 1997.  The  Partnership's  ability to  operate or  liquidate  assets;
secure leases; and re-lease those assets for which leases expire during the life
of the  Partnership  is subject to many factors.  Therefore,  the  Partnership's
performance  for the  three  months  ended  March  31,  1998 is not  necessarily
indicative  of future  periods.  In the first quarter of 1998,  the  Partnership
distributed $2.5 million to the limited partners,  or $0.25 per weighted-average
depositary unit.

(II)  FINANCIAL CONDITION - CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS

For the three months ended March 31, 1998, the Partnership  generated sufficient
operating cash (net cash provided by operating  activities,  plus  distributions
from USPEs) to meet its operating  obligations and maintain the current level of
distributions (total for three months ended March 31, 1998 of approximately $2.6
million) to the partners.

During the three months ended March 31, 1998, the  Partnership  sold or disposed
of marine containers,  trailers, and a railcar, with an aggregate net book value
of $0.3 million, for proceeds of $0.3 million.

The Partnership  purchased its initial  equipment  portfolio with capital raised
from its initial  equity  offering  and  permanent  debt  financing.  No further
capital  contributions  from original  partners are permitted under the terms of
the Partnership's limited partnership  agreement.  In addition, the Partnership,
under its current loan agreement, does not have the capacity to incur additional
debt.  Therefore,  the  Partnership  relies on  operating  cash flow to meet its
operating  obligations,   maintain  working  capital  reserves,  and  make  cash
distributions to the limited partners.

(III)  YEAR 2000 COMPLIANCE

The General  Partner is currently  addressing  the year 2000  computer  software
issue and creating a timetable for carrying out any program  modifications  that
may be required.  The General Partner does not anticipate that the cost of those
modifications allocable to the Partnership will be material.

(IV)  ACCOUNTING PRONOUNCEMENTS

In  June  1997,  the  Financial   Accounting  Standards  Board  issued  two  new
statements:  SFAS No. 130,  "Reporting  Comprehensive  Income,"  which  requires
enterprises to report,  by major  component and in total,  all changes in equity
from  nonowner  sources;  and SFAS No. 131,  "Disclosures  about  Segments of an
Enterprise  and  Related  Information,"  which  establishes  annual and  interim
reporting  standards  for a public  company's  operating  segments  and  related
disclosures about its products, services, geographic areas, and major customers.
Both statements are effective for the  Partnership's  fiscal year ended December
31, 1998, with earlier  application  permitted.  The effect of adoption of these
statements  will  be  limited  to the  form  and  content  of the  Partnership's
disclosures and will not impact the  Partnership's  results of operations,  cash
flow, or financial position.

(V)  OUTLOOK FOR THE FUTURE

Since the  Partnership  is in its holding or passive  liquidation  phase through
December 31, 1998, the General  Partner will be 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 anticipates that the liquidation of Partnership assets
will be completed by the scheduled  termination of the Partnership at the end of
the year 2000.

The  Partnership  intends  to use cash  flow  from  operations  to  satisfy  its
operating  requirements,  pay loan principal on debt,  maintain  working capital
reserves, and pay cash distributions to the investors.

(VI)  FORWARD-LOOKING INFORMATION

Except for the historical  information  contained herein, the discussion in this
Form  10-Q   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-Q
should be read as being  applicable  to all related  forward-looking  statements
wherever they appear in this Form 10-Q. The  Partnership's  actual results could
differ materially from those discussed here.


<PAGE>




                          PART II -- OTHER INFORMATION

Item 6.           Exhibits and Reports on Form 8-K

         (a)      Exhibits

              None.

         (b)      Reports on Form 8-K

              None.






















                      (This space intentionally left blank)




<PAGE>



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                      PLM EQUIPMENT GROWTH FUND III
                                      PARTNERSHIP

                                      By: PLM Financial Services, Inc.
                                          General Partner




Date:  May 12, 1998                   By: /s/ Richard K Brock
                                          -------------------
                                          Richard K Brock
                                          Vice President and
                                          Corporate Controller




<PAGE>