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, 2001

[ ]      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>

<TABLE>


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

<CAPTION>


                                                              March 31,  December 31,
                                                                2001        2000
                                                              --------    --------
<S>                                                           <C>         <C>
Assets

Equipment held for operating lease, at cost                   $ 39,510    $ 40,028
Less accumulated depreciation                                  (34,277)    (34,361)
                                                              --------    --------
                                                                 5,233       5,667
Equipment held for sale                                           --         1,703
                                                              --------    --------
  Net equipment                                                  5,233       7,370

Cash and cash equivalents                                        7,284       1,832
Restricted cash                                                   --           125
Accounts and note receivable, net of allowance for doubtful
    accounts of $485 in 2001 and $455 in 2000                    1,076         591
Investments in unconsolidated special-purpose entities            --            76
Prepaid expenses and other assets                                   64          43
                                                              --------    --------

    Total assets                                              $ 13,657    $ 10,037
                                                              ========    ========

Liabilities and partners' capital

Liabilities:
Accounts payable and accrued expenses                         $    360    $    462
Due to affiliates                                                  106          72
Lessee deposits and reserves for repairs                             2         187
                                                              --------    --------
  Total liabilities                                                468         721
                                                              --------    --------

Partners' capital:
Limited partners (9,871,073 depositary units as
    of March 31, 2001 and December 31, 2000)                    13,189       9,316
General Partner                                                   --          --
                                                              --------    --------
  Total partners' capital                                       13,189       9,316
                                                              --------    --------

    Total liabilities and partners' capital                   $ 13,657    $ 10,037
                                                              ========    ========

<FN>

                 See accompanying notes to financial statements.
</FN>
</TABLE>

                                       1
<PAGE>



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



                                                           For the Three Months
                                                               Ended March 31,
                                                             2001         2000
                                                           -------      -------
Revenues

Lease revenue                                              $ 1,970      $ 3,154
Interest and other income                                       53           14
Net gain on disposition of equipment                         3,842           37
                                                           -------      -------
  Total revenues                                             5,865        3,205
                                                           -------      -------

Expenses

Depreciation and amortization                                  601        1,388
Repairs and maintenance                                        560          455
Equipment operating expenses                                     8            8
Insurance expense                                               71           35
Management fees to affiliate                                   119          179
Interest expense                                              --            150
General and administrative expenses to affiliates              164          113
Other general and administrative expenses                      429          297
Provision for (recovery of) bad debts                           30          (43)
                                                           -------      -------
  Total expenses                                             1,982        2,582
                                                           -------      -------

Equity in net loss of unconsolidated
    special-purpose entities                                   (10)         (72)
                                                           -------      -------

    Net income                                             $ 3,873      $   551
                                                           =======      =======

Partners' share of net income

Limited partners                                           $ 3,873      $   523
General Partner                                               --             28
                                                           -------      -------

    Total                                                  $ 3,873      $   551
                                                           =======      =======

Limited partners' net income per weighted-average
  depositary unit                                          $  0.39      $  0.05
                                                           =======      =======


                 See accompanying notes to financial statements.


                                       2
<PAGE>



                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
             For the Period from December 31, 1999 to March 31, 2001
                            (in thousands of dollars)



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

Net income                                        3,873        --         3,873
                                               --------    --------    --------

  Partners' capital as of March 31, 2001       $ 13,189    $   --      $ 13,189
                                               ========    ========    ========








                 See accompanying notes to financial statements.


                                       3
<PAGE>

<TABLE>

                                                PLM EQUIPMENT GROWTH FUND III
                                                   (A Limited Partnership)
                                                  STATEMENTS OF CASH FLOWS
                                                  (in thousands of dollars)
<CAPTION>
                                                                                                            For the Three Months
                                                                                                                Ended March 31,
                                                                                                           2001              2000
                                                                                                         -------            -------
<S>                                                                                                      <C>                <C>
Operating activities

Net income                                                                                               $ 3,873            $   551
Adjustments to reconcile net income to net cash provided by (used in)
    operating activities:
  Depreciation and amortization                                                                              601              1,388
  Net gain on disposition of equipment                                                                    (3,842)               (37)
  Equity in net loss from unconsolidated special-purpose entities                                             10                 72
  Changes in operating assets and liabilities:
    Accounts and note receivables, net                                                                      (485)               (97)
    Restricted cash                                                                                          125               --
    Prepaid expenses and other assets                                                                        (21)                18
    Accounts payable and accrued expenses                                                                   (102)              (479)
    Due to affiliates                                                                                         34                 17
    Lessee deposits and reserves for repairs                                                                (185)                63
                                                                                                         -------            -------
      Net cash provided by operating activities                                                                8              1,496
                                                                                                         -------            -------

Investing activities

Payments for capitalized improvements                                                                        (44)              --
Distributions from unconsolidated special-purpose entities                                                    66                 87
Proceeds from disposition of equipment                                                                     5,422                173
                                                                                                         -------            -------
      Net cash provided by investing activities                                                            5,444                260
                                                                                                         -------            -------

Financing activities

Principal payments on note payable                                                                          --               (3,727)
Payments on short-term loan from affiliate                                                                  --                 (600)
Proceeds from short-term loan from affiliate                                                                --                2,350
                                                                                                         -------            -------
      Net cash used in financing activities                                                                 --               (1,977)
                                                                                                         -------            -------

Net increase (decrease) in cash and cash equivalents                                                       5,452               (221)
Cash and cash equivalents at beginning of period                                                           1,832                486
                                                                                                         -------            -------
Cash and cash equivalents at end of period                                                               $ 7,284            $   265
                                                                                                         =======            =======


Supplemental information

Interest paid                                                                                            $  --              $   147
                                                                                                         =======            =======
<FN>


                                            See accompanying notes to financial statements.
</FN>
</TABLE>

                                                               4
<PAGE>

                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001

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, 2001 and December 31, 2000, the
     statements  of income for the three  months  ended March 31, 2001 and 2000,
     the statements of changes in partners' capital for the period from December
     31, 1999 to March 31, 2001,  and the statements of cash flows for the three
     months  ended  March  31,  2001  and  2000.  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,  2000,  on file at the  Securities  and
     Exchange Commission.

2.   Schedule of Partnership Phases

     The  Partnership,  in accordance  with its limited  partnership  agreement,
     entered  its  liquidation  phase on  January 1, 2000 and has  commenced  an
     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.

3.   Cash Distributions

     Cash distributions are recorded when paid and may include amounts in excess
     of net income that are  considered to represent a return of capital.  There
     were no cash  distributions  for the three  months ended March 31, 2001 and
     2000.

     Cash distributions related to the results from the first quarter of 2001 of
     $0.6 million, will be paid during May 2001.

4.   Transactions with General Partner and Affiliates

     The balance due to  affiliates  as of March 31, 2001 and  December 31, 2000
     included $0.1 million due to FSI and its affiliate for management  fees and
     administrative expenses.

     There was no Partnership's proportional share of USPE-affiliated management
     fees payable as of March 31, 2001. The Partnership's  proportional share of
     USPE-affiliated  management  fees  payable  as of  December  31,  2000  was
     $10,000.

     The  Partnership's  proportional  share  of the  expenses  incurred  by the
     unconsolidated  special-purpose  entities during the first quarters of 2001
     and 2000 were $1,000 and $13,000, respectively.


                                       5
<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001

5.   Equipment

     The  components  of  owned  equipment  were as  follows  (in  thousands  of
     dollars):

                                                        March 31,   December 31,
                                                          2001           2000
                                                        --------       --------
     Rail equipment                                     $ 33,286       $ 33,370
     Trailers                                              3,240          3,428
     Marine containers                                     2,984          3,230
                                                        --------       --------
                                                          39,510         40,028
     Less accumulated depreciation                       (34,277)       (34,361)
                                                        --------       --------
                                                           5,233          5,667
     Equipment held for sale                                --            1,703
                                                        --------       --------
         Net equipment                                  $  5,233       $  7,370
                                                        ========       ========

     As of March 31, 2001,  all  equipment in the  Partnership  portfolio was on
     lease except for 67 railcars and 20 trailers.  As of December 31, 2000, all
     owned  equipment in the  Partnership  portfolio  was on lease except for 88
     railcars, 25 trailers, and an aircraft. The net book value of the equipment
     off lease  was $0.3  million  and $0.6  million  as of March  31,  2001 and
     December 31, 2000, respectively.

     Capital  improvements to the  Partnership's  equipment of $44,000 were made
     during the three months ended March 31, 2001. No capital  improvements were
     made during the three months ended March 31, 2000.

     During the three months ended March 31, 2001, the  Partnership  disposed of
     aircraft, marine containers,  trailers, and railcars, with an aggregate net
     book value of $1.6  million,  for aggregate  proceeds of $5.4 million.  The
     aircraft was reported as equipment held for sale as of December 31, 2000.

     During the three months ended March 31, 2000, the  Partnership  disposed of
     marine containers, trailers, and railcars, with an aggregate net book value
     of $0.1 million, for aggregate proceeds of $0.2 million.

6.   Investments in an Unconsolidated Special-Purpose Entity (USPE)

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

<TABLE>
<CAPTION>
                                                              March 31,  December 31,
                                                                2001         2000
                                                                ----         ----

<S>  <C>                                                        <C>         <C>
     56% interest in an entity that owned a marine vessel       $ --        $76
                                                                ----        ---
         Net investments                                        $ --        $76
                                                                ====        ===


</TABLE>


                                       6
<PAGE>
                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001

7.   Operating Segments

     The Partnership  operates or operated primarily in four different segments:
     aircraft leasing,  railcar leasing,  marine container leasing,  and trailer
     leasing.  Each equipment leasing segment engages in short-term and mid-term
     operating leases to a variety of customers.  The following tables present a
     summary of the operating segments (in thousands of dollars):

<TABLE>
<CAPTION>
                                                                     Marine
                                                         Aircraft    Railcar    Container   Trailer       All
     For the quarter Ended March 31, 2001                Leasing     Leasing     Leasing    Leasing     Other(1)       Total
     ------------------------------------                -------     -------     -------    -------     --------       -----
<S>                                                     <C>         <C>         <C>         <C>          <C>          <C>
     Revenues
       Lease revenue                                    $    185    $  1,680    $     12    $     93     $   --       $  1,970
       Interest income and other                               6        --          --          --             47           53
       Net gain on disposition of equipment                3,699          90          32          21         --          3,842
                                                        --------    --------    --------    --------     --------     --------
         Total revenues                                    3,890       1,770          44         114           47        5,865

     Costs and Expenses
       Operations support                                     25         509        --            45           60          639
       Depreciation and amortization                         151         395           9          46         --            601
       Management fees                                         2         111           1           5         --            119
       General and administrative expenses                   147          52        --            20          374          593
       Provision of bad debts                               --            30        --          --           --             30
                                                        --------    --------    --------    --------     --------     --------
         Total costs and expenses                            325       1,097          10         116          434        1,982
                                                        --------    --------    --------    --------     --------     --------
     Equity in net loss of USPEs                            --          --          --          --            (10)         (10)
                                                        --------    --------    --------    --------     --------     --------
     Net income (loss)                                  $  3,565    $    673    $     34    $     (2)    $   (397)    $  3,873
                                                        ========    ========    ========    ========     ========     ========

     Total assets as of March 31, 2001                  $    473    $  4,830    $    111    $    895     $  7,348     $ 13,657
                                                        ========    ========    ========    ========     ========     ========
</TABLE>
<TABLE>
<CAPTION>
                                                                     Marine
                                                         Aircraft    Railcar    Container   Trailer       All
     For the quarter Ended March 31, 2001                Leasing     Leasing     Leasing    Leasing     Other(1)       Total
     ------------------------------------                -------     -------     -------    -------     --------       -----
<S>                                                    <C>         <C>          <C>         <C>          <C>          <C>
     Revenues
       Lease revenue                                   $  1,205    $  1,751     $     32    $    166     $   --       $  3,154
       Interest income and other                           --          --           --          --             14           14
       Net gain (loss) on disposition of
         equipment                                         --            44            7         (14)        --             37
                                                       --------    --------     --------    --------     --------     --------
         Total revenues                                   1,205       1,795           39         152           14        3,205

     Costs and Expenses
       Operations support                                    49         386         --            53           10          498
       Depreciation and amortization                        867         420           23          63           15        1,388
       Interest expense                                    --          --           --          --            150          150
       Management fees                                       46         123            1           9         --            179
       General and administrative expenses                   37          56         --            29          288          410
       Recovery of bad debts                               --           (42)        --            (1)        --            (43)
                                                       --------    --------     --------    --------     --------     --------
         Total costs and expenses                           999         943           24         153          463        2,582
                                                       --------    --------     --------    --------     --------     --------
     Equity in net income (loss) of USPEs                    22        --           --          --            (94)         (72)
                                                       --------    --------     --------    --------     --------     --------
     Net income (loss)                                 $    228    $    852     $     15    $     (1)    $   (543)         551
                                                       ========    ========     ========    ========     ========     ========

     Total assets as of March 31, 2000                 $  6,329    $  6,039     $    334    $  1,547     $  2,616     $ 16,865
                                                       ========    ========     ========    ========     ========     ========
<FN>
--------------------------
(1)  Includes certain interest income and costs not identifiable to a particular
     segment such as  amortization  expense and certain  operations  support and
     general and administrative expenses.

(2)  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>

                                       7
<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001

8.   Net Income Per Weighted-Average Partnership Unit

     Net income per  weighted-average  Partnership unit was computed by dividing
     net income  attributable  to the limited  partners by the  weighted-average
     number of  Partnership  units  deemed  outstanding  during the period.  The
     weighted-average  number of Partnership units deemed outstanding during the
     three months ended March 31, 2001 and 2000 was 9,871,073.

9.   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
     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.

     The  Partnership  is involved as plaintiff  or  defendant in various  other
     legal actions  incident to its business.  Management  does not believe that
     any of these  actions  will be material to the  financial  condition of the
     Partnership.

10.  Liquidation and Special Distributions

     On January 1, 2000, the General Partner began the liquidation  phase of the
     Partnership and commenced an orderly liquidation of the Partnership assets.
     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 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 carried at the lower of depreciated cost or fair value less
     cost to dispose.  Although the General Partner estimates that there will be
     distributions  after  liquidation  of assets and  liabilities,  the amounts
     cannot  be  accurately  determined  prior  to  actual  liquidation  of  the
     equipment.  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.

     The  Partnership  is not  permitted  to  reinvest  proceeds  from  sales or
     liquidations of equipment.  These proceeds,  in excess of operational  cash
     requirements,  are periodically paid out to limited partners in the form of
     special  distributions.  No  special  distributions  were paid in the first
     quarter  of 2001 and 2000.  The sales and  liquidations  occur  because  of
     certain damaged equipment, the determination by the General Partner that it
     is the appropriate  time to maximize the return on an asset through sale of
     that  asset,  and,  in some  leases,  the ability of the lessee to exercise
     purchase options.


                                       8
<PAGE>



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

(I)  RESULTS OF OPERATIONS

Comparison  of PLM  Equipment  Growth Fund III's (the  Partnership's)  Operating
Results for the Three Months Ended March 31, 2001 and 2000

(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 during the three months ended March 31, 2001 when compared to the same
period of 2000.  Gains or losses from the sale of equipment,  interest and other
income,  and certain  expenses such as depreciation and amortization and general
and  administrative  expenses relating to the operating  segments (see Note 7 to
the unaudited  financial  statements),  are not included in the owned  equipment
operation discussion because these expenses are indirect in nature, not a result
of operations  but 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 Three Months
                                                         Ended March 31,
                                                     2001             2000
                                                     ------          ------
     Railcars                                        $1,171          $1,365
     Aircraft                                           160           1,156
     Trailers                                            48             113
     Marine containers                                   12              32

Railcars: Railcars lease revenues and direct expenses were $1.7 million and $0.5
million,  respectively,  for the quarter  ended March 31, 2001  compared to $1.8
million and $0.4 million for the quarter  ended March 31, 2000.  Lease  revenues
declined as a result of lower lease rates.  The  increase in direct  expenses of
$0.1 million was a result of more repairs  being  required on rail  equipment in
the first quarter of 2001 than was needed during the first quarter of 2000.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.2 million and
$25,000,  respectively,  for the quarter ended March 31, 2001,  compared to $1.2
million  and  $49,000,  respectively,  during  the same  period  of 2000.  Lease
revenues  decreased  $1.0  million  during the three months ended March 31, 2001
compared to the same period in 2000 due to the sale of two aircraft during 2001.

Trailers:  Trailer  lease  revenues  and direct  expenses  were $0.1 million and
$45,000,  respectively,  for the quarter ended March 31, 2001,  compared to $0.2
million and $0.1  million,  respectively,  during the same  period of 2000.  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  container  lease revenues and direct  expenses were
$12,000 and zero,  respectively,  for the quarter ended March 31, 2001, compared
to $32,000 and $1,000, respectively,  during the same period of 2000. The number
of  marine  containers  owned  by the  Partnership  has  been  declining  due to
dispositions.  The result of this declining  fleet has been a decrease in marine
container contribution.

(B)  Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $1.4  million for the quarter  ended March 31, 2001
decreased from $2.1 million for the same period of 2000.  Significant  variances
are explained as follows:

     (i) A  decrease  of $0.8  million  in  depreciation  and  amortization
     expenses  from  2000  levels   reflects  the  disposition  of  certain
     Partnership assets during 2001 and 2000.

     (ii) A decrease  of $0.2  million in  interest  expense was due to the
     repayment of the Partnership's debt during 2000.

                                     9
<PAGE>

     (iii) A $0.2 million increase in general and  administrative  expenses
     was due to an  increase  of $0.1  million  in legal  fees  related  to
     aircraft litigation. Allocations by the General Partner also increased
     $0.1 million,  of which $30,000 was due to severance  costs related to
     staff reductions.

     (iv) A $0.1  million  increase  in bad debt  expense  from  the  first
     quarter  of  2000.  A $0.1  million  increase  was due to the  General
     Partner's  evaluation of the  collectability  of receivables  due from
     certain lessee and a $43,000  increase was due to recovery of bad debt
     previously  reserved  for during the first  quarter of 2000. A similar
     recovery did not occur in the first quarter of 2001.

(C)  Net Gain on Disposition of Owned Equipment

The net gain on the disposition of owned equipment for the first quarter of 2001
was $3.8 million, resulting from the disposition of aircraft, marine containers,
railcars,  and trailers,  with an aggregate net book value of $1.6 million,  for
aggregate  proceeds of $5.4 million.  The net gain on the  disposition  of owned
equipment  for the  first  quarter  of 2000  was  $37,000,  resulting  from  the
disposition of marine containers,  railcars, and trailers, with an aggregate net
book value of $0.1 million, for aggregate proceeds of $0.2 million.

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

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,
                                                             2001     2000
                                                             ----     ----
     Aircraft, aircraft engines, and rotables                $--      $ 22
     Marine vessel                                           (10)      (94)
                                                             ----     ----
         Equity in net income (loss) of USPEs               $(10)     $(72)
                                                            ====      ====

Aircraft,  aircraft engines, and rotables: As of March 31, 2001, the Partnership
had no remaining interest in entities that owned aircraft,  aircraft engines, or
rotables.  The  Partnership  had no  revenues  or  expenses in USPE's that owned
aircraft,  aircraft  engines,  and  rotables in the three months ended March 31,
2001. The Partnership's share of aircraft revenues and expenses were $22,000 and
zero,  respectively,  for the  quarter  ended  March 31,  2000.  The  $22,000 of
aircraft revenues for the three months ended March 31, 2000 represented interest
income earned during the first quarter of 2000 on accounts receivable.

Marine vessel:  As of March 31, 2001, the Partnership had no remaining  interest
in entities that owned marine vessels.  The Partnership's  share of revenues and
expenses of marine vessels was $6,000 and $16,000, respectively, for the quarter
ended March 31, 2001,  compared to $0.2 million and $0.3 million,  respectively,
for the same period of 2000.  The  decrease  in  revenues  and expenes of marine
vessels in the first quarter of 2001 compared to the same period of 2000 was due
to the sale of the  Partnership's  interest  in an  entity  that  owned a marine
vessel during the third quarter of 2000.

(E)  Net Income

As a result of the foregoing,  the  Partnership had a net income of $3.9 million
in the first quarter of 2001 compared to net income of $0.6 million in the first
quarter of 2000.  The  Partnership's  ability to operate and  liquidate  assets,
secure leases,  and re-lease those assets whose leases expire is subject to many
factors.  Therefore,  the  Partnership's  performance  in the three months ended
March 31, 2001 is not  necessarily  indicative of future  periods.  In the first
quarter of 2001, the Partnership did not make any cash distributions.

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

For the three months ended March 31, 2001, the Partnership  generated  operating
cash  of  $0.1  million  (net  cash  provided  by  operating  activities,   plus
non-liquidating distributions from USPEs) to meet its operating obligations.

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<PAGE>

During  the three  months  ended  March 31,  2001,  the  Partnership  sold owned
equipment and received aggregate proceeds of $5.4 million.

During the three  months ended March 31,  2001,  accounts  and note  receivables
increased $0.5 million was due to the increase in notes receivable related to an
aircraft sold in the first quarter of 2001.

During the three  months  ended  March 31,  2001,  accounts  payable and accrued
expenses  decreased  $0.1  million  due to the  reduction  of  the  size  of the
Partnership's equipment portfolio.

During the three months ended March 31, 2001,  lessee  deposits and reserves for
repairs  decreased  $0.2  million.  This  reflects a decrease of $0.1 million in
lessee  deposits  due to the  return of  security  deposits  to the  buyers  who
purchased  an  aircraft  during the first  quarter of 2001.  A decrease  of $0.1
million in prepaid aircraft lease revenue was due to the sale of an aircraft.

The General  Partner has not  planned  any  expenditure,  nor is it aware of any
contingencies  that  would  cause the  Partnership  to  require  any  additional
capital.

The Partnership is in its active liquidation phase. As a result, 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 the partners.

The amounts  reflected for assets and  liabilities of the  Partnership  have not
been adjusted to reflect  liquidation  values.  The equipment  portfolio that is
actively being marketed for sale by the General Partner  continues to be carried
at the lower of depreciated  cost or fair value less cost of disposal.  Although
the General Partner  estimates that there will be  distributions to the partners
after final disposal of assets and settlement of liabilities, the amounts cannot
be accurately determined prior to actual disposal of the equipment.

(III)  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 in December 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.

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

Liquidation of the Partnership's equipment will cause a reduction in the size of
the  equipment  portfolio and may result in a reduction of  contribution  to the
Partnership.  Other factors affecting the Partnership's contribution in the year
2001 include:

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 its  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  for the 1st  quarter of 2001 are 1.7%
     below those of 2000.  This decrease has led to lower  utilization and lower
     contribution  to the  Partnership  when 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


                                       11
<PAGE>

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  and  proceeds  from
disposition of equipment to satisfy its operating requirements, maintain working
capital reserves, and pay cash distributions to the unitholders.

(IV)  FORWARD-LOOKING INFORMATION

Except  for the  historical  information  contained  herein,  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.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Partnership's  primary market risk exposure is currency  devaluation  risk.
During the first quarter of 2001, 71% of the Partnership's  total lease revenues
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.









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<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)










                                       13
<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


                                   By: PLM Financial Services, Inc.
                                       General Partner




Date:  May 7, 2001                 By:
                                       -----------------------------------------
                                       Richard K Brock
                                       Vice President and
                                       Chief Financial Officer


                                      14

<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

                                   By: PLM Financial Services, Inc.
                                       General Partner




Date:  May 7, 2001                 By: /s/ Richard K Brock
                                       -----------------------------------------
                                       Richard K Brock
                                       Vice President and
                                       Chief Financial Officer





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