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
         JUNE 30, 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 ______









<PAGE>



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


<TABLE>
<CAPTION>

                                                                                                  June 30,            December 31,
                                                                                                    2000                 1999
                                                                                             ------------------------------------
         ASSETS

         <S>                                                                                  <C>                  <C>
         Equipment held for operating lease, at cost                                          $      83,108        $    84,191
         Less accumulated depreciation                                                              (71,319)           (69,303)
                                                                                              ------------------------------------
           Net equipment                                                                             11,789             14,888

         Cash and cash equivalents                                                                      844                486
         Accounts receivable, net of allowance for doubtful
             accounts of $1,662 in 2000 and $1,757 in 1999                                              663                727
         Investments in unconsolidated special-purpose entities                                       2,235              2,498
         Deferred charges, net of accumulated
             amortization of $309 in 1999                                                                --                 31
         Prepaid expenses and other assets                                                               26                 60
                                                                                              ------------------------------------

             Total assets                                                                     $      15,557        $    18,690
                                                                                              ====================================

         LIABILITIES AND PARTNERS' CAPITAL

         Liabilities:
         Accounts payable and accrued expenses                                                $         133        $       786
         Due to affiliates                                                                            4,663                699
         Lessee deposits and reserves for repairs                                                     1,669              1,419
         Note payable                                                                                    --              7,458
                                                                                              ------------------------------------
           Total liabilities                                                                          6,465             10,362
                                                                                              ------------------------------------

         Partners' capital:
         Limited partners (9,871,073 depositary units as
             of June 30, 2000 and December 31, 1999)                                                  9,092              8,328
         General Partner                                                                                 --                 --
                                                                                              ------------------------------------
           Total partners' capital                                                                    9,092              8,328
                                                                                              ------------------------------------

             Total liabilities and partners' capital                                          $      15,557        $    18,690
                                                                                              ====================================


</TABLE>











                 See accompanying notes to financial statements.

<PAGE>



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


                                                                 For the Three Months                 For the Six Months
                                                                    Ended June 30,                      Ended June 30,
                                                                  2000            1999                2000            1999
                                                             ---------------------------         ---------------------------
REVENUES

<S>                                                            <C>             <C>                 <C>            <C>
Lease revenue                                                  $   3,014       $   3,908           $   6,168      $    7,812
Interest and other income                                             28              46                  42             114
Net gain on disposition of equipment                                   8             453                  45             466
                                                              -----------------------------        ---------------------------
  Total revenues                                                   3,050           4,407               6,255           8,392
                                                              -----------------------------        ---------------------------

EXPENSES

Depreciation and amortization                                      1,369           1,990               2,757           3,987
Repairs and maintenance                                              706             608               1,161           1,090
Equipment operating expenses                                           8             203                  16             399
Insurance expense                                                     34              48                  69             128
Management fees to affiliate                                         171             214                 350             432
Interest expense                                                     117             245                 267             561
General and administrative expenses to affiliates                     91             116                 204             249
Other general and administrative expenses                            199             271                 496             637
Loss on revaluation of equipment                                     191              --                 191              --
Recovery of bad debts                                                (62)            (13)               (105)            (22)
                                                             ------------------------------       ---------------------------
  Total expenses                                                   2,824           3,682               5,406           7,461
                                                             -----------------------------        ---------------------------

Minority interests                                                    --              (2)                 --              19
Equity in net income (loss) of unconsolidated
    special-purpose entities                                         (13)              4                 (85)          1,477
                                                             ------------------------------        ---------------------------

    Net income                                                 $     213       $     727           $     764           2,427
                                                             ==============================        ===========================

PARTNERS' SHARE OF NET INCOME

Limited partners                                               $     213       $     623           $     764      $    2,219
General Partner                                                       --             104                  --             208
                                                             -----------------------------
                                                                                                   ---------------------------

    Total                                                      $     213       $     727           $     764      $    2,427
                                                             ===============================        ==========================

Limited partners net income per weighted-average
  depositary unit                                              $    0.02       $    0.06           $    0.08      $     0.22
                                                             ==============================        ===========================

Cash distribution                                              $      --       $   2,079           $      --      $    4,157
                                                             ===============================       ===========================
Cash distribution per weighted-average
    depositary unit                                            $      --       $    0.20           $      --      $     0.40
                                                             ==============================        ===========================

</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, 1998 to June 30, 2000
                            (in thousands of dollars)

<TABLE>
<CAPTION>


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

  <S>                                                  <C>                <C>             <C>
    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                                                  764              --                764

                                                       -------------------------------------------------
    Partners' capital as of June 30, 2000              $    9,092         $    --         $    9,092
                                                       =================================================

</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 Six Months
                                                                                                        Ended June 30,
                                                                                                     2000            1999
                                                                                                 -----------------------------
  OPERATING ACTIVITIES

  <S>                                                                                              <C>           <C>
  Net income                                                                                       $    764      $    2,427
  Adjustments to reconcile net income to net cash provided by (used in)
      operating activities:
    Depreciation and amortization                                                                     2,757           3,987
    Loss on revaluation of equipment                                                                    191              --
    Net gain on disposition of equipment                                                                (45)           (466)
    Equity in net loss (income) from unconsolidated special-purpose entities                             85          (1,477)
    Changes in operating assets and liabilities:
      Accounts receivable, net                                                                           96            (687)
      Prepaid expenses and other assets                                                                  34              12
      Accounts payable and accrued expenses                                                            (653)           (573)
      Due to affiliates                                                                                  14              30
      Lessee deposits and reserves for repairs                                                          250             340
      Minority interests                                                                                 --             (89)
                                                                                                  ----------------------------
        Net cash provided by operating activities                                                     3,493           3,504
                                                                                                  ----------------------------

  INVESTING ACTIVITIES

  Payments for capitalized improvements                                                                 (11)             (2)
  Distributions from unconsolidated special-purpose entities                                            178               8
  Distributions from liquidation of unconsolidated special-purpose entity                                --           3,548
  Proceeds from disposition of equipment                                                                206             634
                                                                                                  ---------------------------
        Net cash provided by investing activities                                                       373           4,188
                                                                                                  ----------------------------

  FINANCING ACTIVITIES

  Principal payments on note payable                                                                 (7,458)         (3,584)
  Due from affiliates                                                                                 3,950              --
  Cash distributions paid to limited partners                                                            --          (3,949)
  Cash distributions paid to General Partner                                                             --            (208)
                                                                                                  ----------------------------
        Net cash used in financing activities                                                        (3,508)         (7,741)
                                                                                                  ----------------------------

  Net increase (decrease) in cash and cash equivalents                                                  358             (49)
  Cash and cash equivalents at beginning of period                                                      486           3,429
                                                                                                  ----------------------------
  Cash and cash equivalents at end of period                                                            844      $    3,380
                                                                                                  ============================

  SUPPLEMENTAL INFORMATION

  Interest paid                                                                                    $    220      $      561
                                                                                                  =================================




</TABLE>



                 See accompanying notes to financial statements.

<PAGE>



                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2000

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 June 30, 2000 and December 31, 1999, the
     statements  of income for the three  months  and six months  ended June 30,
     2000 and 1999,  the  statements  of changes in  partners'  capital  for the
     period from December 31, 1998 to June 30, 2000,  and the statements of cash
     flows for the six months ended June 30, 2000 and 1999. 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,  1999,  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.  The  Partnership  will
     terminate on December 31, 2000, unless terminated  earlier upon the sale of
     all  equipment  and by certain  other  events.  The General  Partner may no
     longer  purchase  additional  equipment.  All future cash flows and surplus
     funds, if any, are to be used for distributions to partners,  except to the
     extent used to maintain reasonable reserves.  During the liquidation phase,
     the  Partnership's  assets will continue to be recorded at the lower of the
     carrying  amount or fair  value  less  cost to sell.  The  General  Partner
     anticipates that the liquidation of Partnership assets will be completed by
     the end of the year 2000.

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 and six  months  ended  June 30,
     2000. For the six months ended June 30, 1999,  cash  distributions  totaled
     $4.2 million.  For the three months ended June 30, 1999, cash distributions
     totaled $2.1 million.  Cash  distributions  to the limited partners of $1.7
     million for the six months ended June 30, 1999,  were deemed to be a return
     of capital.

4.   TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES

     The balance due to affiliates as of June 30, 2000 included $0.1 million due
     to FSI and its affiliate for  management  fees, and $4.6 million due to FSI
     for a loan made to the Partnership.  The Partnership is charged market rate
     interest on the loans from FSI. Interest expense charged by FSI was $14,000
     and $43,000 for the three and six months ended June 30, 2000, respectively.
     The balance due to affiliates as of December 31, 1999 includes $0.1 million
     due to FSI and its affiliates  for management  fees and $0.6 million due to
     FSI for a loan made to the Partnership.

     The  Partnership's  proportional  share of  unconsolidated  special purpose
     entities (USPE's)-affiliated  management fees, of $17,000 and $12,000, were
     payable as of June 30, 2000 and December 31, 1999, respectively.




<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2000

4.   TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES (CONTINUED)

     The Partnership's proportional share of the affiliated expenses incurred by
     the unconsolidated  special-purpose entities during 2000 and 1999 is listed
     in the following table (in thousands of dollars):
<TABLE>
<CAPTION>


                                                       For the Three Months               For the Six Months
                                                          Ended June 30,                    Ended June 30,
                                                       2000           1999               2000            1999
                                                    --------------------------------------------------------------

  <S>                                               <C>            <C>                <C>            <C>
  Management fees                                   $      16      $      --          $     27       $       --
  Data processing and administrative
      expenses                                              2             --                 6               2

</TABLE>


5.   EQUIPMENT

     The  components  of  owned  equipment  were as  follows  (in  thousands  of
dollars):
<TABLE>
<CAPTION>


                                                                    June 30,             December 31,
                                                                      2000                  1999
                                                               --------------------------------------



  <S>                                                           <C>                    <C>
  Aircraft                                                      $     42,000           $   42,000
  Railcars                                                            33,244               33,572
  Marine containers                                                    3,939                4,453
  Trailers                                                             3,925                4,166
                                                                ---------------------------------------
                                                                      83,108               84,191
  Less accumulated depreciation                                      (71,319)             (69,303)
                                                                -------------------------------------
      Net equipment                                             $     11,789           $   14,888
                                                                =====================================

</TABLE>


     As of June 30, 2000, all equipment in the Partnership  portfolio was either
     on  lease  or  operating  in  PLM-affiliated   short-term   trailer  rental
     facilities,  except for 69 railcars,  and an  aircraft.  As of December 31,
     1999,  all  equipment in the  Partnership  portfolio was either on lease or
     operating in  PLM-affiliated  short-term rental  facilities,  except for 40
     railcars and an aircraft. The net book value of the equipment off lease was
     $0.9  million and $1.2  million as of June 30, 2000 and  December 31, 1999,
     respectively.

     Capital  improvements to the  Partnership's  equipment of $11,000 were made
     during the six months  ended June 30,  2000.  Capital  improvements  to the
     Partnership's  equipment  of $2,000 were made  during the six months  ended
     June 30, 1999.

     During the six months ended June 30, 2000, the Partnership sold or disposed
     of marine containers,  trailers,  and railcars,  with an aggregate net book
     value of $0.2 million,  for aggregate proceeds of $0.2 million.  During the
     six months ended June 30, 1999, the Partnership  sold or disposed of marine
     containers,  trailers,  and  railcars,  with an aggregate net book value of
     $0.1 million, for aggregate proceeds of $0.6 million.

     On May 24, 2000, FSI, on behalf of the  Partnership,  entered into an asset
     purchase  agreement to sell the  refrigerated and dry trailer assets of the
     Partnership.   Closing  of  the   transaction  is  contingent  on  numerous
     conditions.  If the sale is completed,  the General Partner  estimates that
     the Partnership's sale proceeds to be approximately $0.2 million. Since the
     sale of the trailers is contingent upon certain  conditions  being met, the
     Partnership's  refrigerated  and dry trailers are not  classified as assets
     held for sale.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2000

5.   EQUIPMENT (CONTINUED)

     During the six months  ended June 30,  2000,  the  Partnership  reduced the
     carrying  value  of  these  trailers  by $0.2  million  to the  equipment's
     estimated realizable value.

6.   INVESTMENTS IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITIES

     The net investment in USPEs included the following  jointly-owned equipment
     (and related assets and liabilities) (in thousands of dollars):
<TABLE>
<CAPTION>

                                                                             June 30,           December 31,
                                                                               2000               1999
                                                                          ----------------------------------

<S>                                                                        <C>                 <C>
56% interest in an entity owning a marine vessel                           $    2,199          $    2,440
25% interest in a trust that owned four commercial aircraft                        36                  58
                                                                           ---------------------------------
    Net investments                                                        $    2,235          $    2,498
                                                                           =================================
</TABLE>

     As of June 30, 2000 and December 31, 1999, all  jointly-owned  equipment in
     the Partnership's USPE portfolio was on lease.

     For the six months ended June 30, 2000,  all  jointly-owned  equipment  was
     accounted  for under the equity  method of  accounting.  For the six months
     ended  June  30,  1999,  certain  jointly-owned   equipment  of  which  the
     Partnership had a controlling  interest greater than 50%, was accounted for
     under the consolidation method of accounting.

7.   OPERATING SEGMENTS

     The  Partnership  operates in five different  segments:  aircraft  leasing,
     railcar  leasing,  marine vessel 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    Marine
                                           Aircraft  Railcar     Vessel   Container  Trailer     All
     For the quarter ended June 30, 2000   Leasing   Leasing    Leasing   Leasing    Leasing   Other<F1>1   Total
     -----------------------------------   -------   -------    -------   -------    -------   ---------    -----


     REVENUES
       <S>                                 <C>       <C>        <C>       <C>        <C>       <C>        <C>
       Lease revenue                       $  1,222  $  1,637   $     --  $     21   $    134  $     --   $  3,014
       Interest income and other                  2         3         --        --         --        23         28
       Net gain (loss) on disposition of
         equipment                               --        (6)        --         6          8        --          8
                                           ------------------------------------------------------------------------
         Total revenues                       1,224     1,634         --        27        142        23      3,050

     Costs and Expenses
       Operations support                       159       527         --         1         51        10        748
       Depreciation and amortization            866       407         --        19         61        16      1,369
       Interest expense                          --        --         --        --         --       117        117
       Management fees                           45       117         --         2          7        --        171
       General and administrative expenses       56        53         --        --         18       163        290
       Recovery of bad debts                     --       (52)        --        --         --       (10)       (62)
                                           ------------------------------------------------------------------------
         Total costs and expenses             1,126     1,052         --        22        137       296      2,633
                                           ------------------------------------------------------------------------
     Equity in net loss of USPEs                 --        --        (13)       --         --        --        (13)
                                           ------------------------------------------------------------------------
     Net income (loss)                     $     98  $    582   $    (13) $      5   $      5  $   (273)  $    404
                                           ========================================================================

     Total assets as of June 30, 2000      $  5,419  $  5,522   $  2,199  $    269   $  1,437  $    902   $ 15,748
                                           ========================================================================
<FN>
<F1>

--------------------------
1    Includes  revenues and costs not identifiable to a particular  segment such
     as interest expense, certain amortization expenses, certain interest income
     and other,  certain  operations  support  and  general  and  administrative
     expenses.
</FN>
</TABLE>


<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2000

7.   OPERATING SEGMENTS (CONTINUED)

<TABLE>
<CAPTION>

                                                                  Marine
                                           Aircraft  Railcar      Vessel        Trailer   Container  All
     For the quarter ended June 30, 1999   Leasing   Leasing      Leasing       Leasing   Leasing   Other<F1>1  Total
     -----------------------------------   -------   -------      -------       -------   -------   ----------  -----

     REVENUES
     <S>                                   <C>       <C>        <C>           <C>       <C>        <C>       <C>
       Lease revenue                       $  1,509  $  1,712   $       471   $    182  $     34   $     --  $  3,908
       Interest income and other                  5        --            --         --        --         41        46
       Net gain on disposition of
         Equipment                               --       353            --          1        99         --       453
                                           ---------------------------------------------------------------------------
         Total revenues                       1,514     2,065           471        183       133         41     4,407

     COSTS AND EXPENSES
       Operations support                       115       459           226         48         1         10       859
       Depreciation and amortization          1,202       442           214         88        29         15     1,990
       Interest expense                          --        --            --         --        --        245       245
       Management fees                           61       118            23         10         2         --       214
       General and administrative expenses      142        57             8         30         1        149       387
       (Recovery of) provision for bad           --       (16)           --          3        --         --       (13)
     debts
                                           ---------------------------------------------------------------------------
         Total costs and expenses             1,520     1,060           471        179        33        419     3,682
                                           ---------------------------------------------------------------------------
       Minority interests                        --        --            (2)        --        --         --        (2)
     Equity in net income (loss) of USPEs         4        --            --         --        --         --         4
                                           ---------------------------------------------------------------------------
     Net income (loss)                     $     (2) $  1,005   $        (2)  $      4  $    100   $   (378) $    727
                                           ===========================================================================

     Total assets as of June 30, 1999      $ 11,214  $  7,230   $     5,154   $  2,058  $    481   $  3,769  $ 29,906
                                           ===========================================================================


                                                                 Marine      Marine
                                           Aircraft  Railcar     Vessel     Container    Trailer      All
    For the six months ended June 30, 2000 Leasing   Leasing    Leasing     Leasing      Leasing     Other<F1>1  Total
    -------------------------------------- --------  -------    -------     ---------    -------     ---------   ------


     REVENUES
       Lease revenue                       $  2,427  $  3,388   $        --   $     53  $    300   $     --  $  6,168
       Interest income and other                  2         3            --         --        --         37        42
       Net gain (loss) on disposition of
         equipment                               --        38            --         13        (6)        --        45
                                           ----------------------------------------------------------------------------
         Total revenues                       2,429     3,429            --         66       294         37     6,255

     COSTS AND EXPENSES
       Operations support                       208       913            --          1       104         20     1,246
       Depreciation and amortization          1,733       827            --         42       124         31     2,757
       Interest expense                          --        --            --         --        --        267       267
       Management fees                           91       240            --          3        16         --       350
       General and administrative expenses       93       109            --         --        47        451       700
       Recovery of bad debts                     --       (94)           --         --        (1)       (10)     (105)
                                           --------------------------------------------------------------------------
         Total costs and expenses             2,125     1,995            --         46       290        759     5,215
                                           --------------------------------------------------------------------------
     Equity in net income (loss) of USPEs        22        --          (107)        --        --         --       (85)
                                           ---------------------------------------------------------------------------
     Net income (loss)                     $    326  $  1,434   $      (107)  $     20  $      4   $   (722) $    955
                                           ==========================================================================

     Total assets as of June 30, 2000      $  5,419  $  5,522   $     2,199   $    269  $  1,437   $    902  $ 15,748
                                           ==========================================================================



<FN>
<F1>
      --------------------------
1    Includes  revenues and costs not identifiable to a particular  segment such
     as interest expense, certain amortization expenses, certain interest income
     and other,  certain  operations  support  and  general  and  administrative
     expenses.
</FN>
</TABLE>


<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2000

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

                                                                 Marine                  Marine
                                           Aircraft  Railcar     Vessel       Trailer   Container  All
    For the six months ended June 30, 1999 Leasing   Leasing     Leasing      Leasing   Leasing    Other<F1>1  Total
    -------------------------------------- --------  -------    --------      -------   ---------  ----------  -----

     <S>                                   <C>       <C>        <C>         <C>         <C>      <C>         <C>
     REVENUES
       Lease revenue                       $  3,019  $  3,469   $     930   $    323    $   71   $     --    $ 7,812
       Interest income and other                 10        --          --         --        --        104        114
       Net gain (loss) on disposition of
         equipment                                2       370          --         (6)      100         --        466
                                           --------------------------------------------------------------------------
         Total revenues                       3,031     3,839         930        317       171        104      8,392

     Costs and Expenses
       Operations support                       209       809         484         94         1         20      1,617
       Depreciation and amortization          2,405       885         428        177        62         30      3,987
       Interest expense                          --        --          --         --        --        561        561
       Management fees                          124       240          46         19         3         --        432
       General and administrative expenses      333       123          23         56         4        347        886
       (Recovery of) provision for bad          (20)       29          --        (31)       --         --        (22)
     debts
                                           --------------------------------------------------------------------------
         Total costs and expenses             3,051     2,086         981        315        70        958      7,461
                                           --------------------------------------------------------------------------
       Minority interests                        --        --          19         --        --         --         19
     Equity in net income (loss) of USPEs     1,477        --          --         --        --         --      1,477
                                           --------------------------------------------------------------------------
                                           ======
     Net income (loss)                     $  1,457  $  1,753   $     (32)  $      2    $  101   $   (854)   $ 2,427
                                           ==========================================================================

     Total assets as of June 30, 1999      $ 11,214  $  7,230   $   5,154   $  2,058    $  481   $  3,769    $29,906
                                           ==========================================================================


<FN>
<F1>

--------------------------
1    Includes  revenues and costs not identifiable to a particular  segment such
     as interest expense, certain amortization expenses, certain interest income
     and other,  certain  operations  support  and  general  and  administrative
     expenses.

</FN>
</TABLE>

8.   DEBT

     During  the  first  six  months  of  2000,  the  Partnership  paid  off the
     outstanding note balance of $7.5 million.

9.   NET INCOME PER WEIGHTED-AVERAGE PARTNERSHIP UNIT

     Net income per  weighted-average  Partnership unit was computed by dividing
     net income attributable to 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 and six months ended June 30, 2000 and 1999 was 9,871,073.

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
     counterclaims  are completely  without merit,  and the General Partner will
     vigorously defend against such counterclaims.  The General Partner believes
     the likelihood 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.





<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A LIMITED PARTNERSHIP)
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2000

11.  LIQUIDATION AND SPECIAL DISTRIBUTIONS

     On January 1, 2000, the General Partner began the liquidation  phase of the
     Partnership  with the  intent to  commence  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  on a quarterly  basis 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.

     No  special  distributions  were paid in the  first six  months of 2000 and
     1999. 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.  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.
























<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 JUNE 30, 2000 AND 1999

In September 1999, the General Partner amended the  corporate-by-laws of certain
unconsolidated special-purpose entities (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 three and
six  months  ended  June 30,  1999 and were  included  with the owned  equipment
operations. For the three and six months ended June 30, 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.

(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 June 30, 2000 when compared to the same
period of 1999.  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 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 June 30,
                                    2000 1999
                       ------------------------------------

  Railcars             $         1,110    $         1,253
  Aircraft                       1,063              1,394
  Trailers                          83                134
  Marine containers                 20                 33
  Marine vessel                     --                245

Railcars: Railcars lease revenues and direct expenses were $1.6 million and $0.5
million,  respectively,  for the quarter  ended June 30, 2000,  compared to $1.7
million and $0.5  million,  respectively,  during the same  period of 1999.  The
number of railcars owned by the  Partnership has been declining due to sales and
dispositions.  The  result of this  declining  fleet is a  decrease  in  railcar
contribution.

Aircraft: Aircraft lease revenues and direct expenses were $1.2 million and $0.2
million,  respectively,  for the quarter  ended June 30, 2000,  compared to $1.5
million and $0.1 million,  respectively,  during the same period of 1999.  Lease
revenues decreased $0.3 million during the three months ended June 30, 2000 when
compared to the same  period in 1999 due to the sale of an  aircraft  during the
fourth quarter of 1999.

Trailers:  Trailer lease revenues and direct expenses were $0.1 million and $0.1
million,  respectively,  for the quarter  ended June 30, 2000,  compared to $0.2
million and $48,000, respectively, during the same period of 1999. 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
$21,000 and $1,000  respectively,  for the quarter ended June 30, 2000, compared
to $34,000 and $1,000, respectively,  during the same period of 1999. The number
of marine  containers  owned by the  Partnership has been declining due to sales
and  dispositions.  The result of this  declining  fleet has been a decrease  in
marine container contribution.

Marine vessel:  Marine vessel lease  revenues and direct  expenses were zero for
the quarter  ended June 30,  2000,  compared  to 0.5  million and $0.2  million,
respectively, for the same period of 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 three months ended
June 30,  2000,  lease  revenues  decreased  $0.5  million  and direct  expenses
decreased $0.2 million when compared to the same period of 1999.

(B)  Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $1.9  million  for the quarter  ended June 30, 2000
decreased from $2.8 million for the same period of 1999.  Significant  variances
are explained as follows:

     (i)  A decrease of $0.6 million in depreciation and  amortization  expenses
          from 1999 levels  reflects a decrease of $0.4  million due to the sale
          or disposition of certain  Partnership  assets during 2000 and 1999. A
          decrease of $0.2 million is 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) Loss on  revaluation  of equipment  increased  $0.2 million during the
          three  months ended June 30, 2000 and  resulted  from the  Partnership
          reducing  the  carrying  value  of  trailers  to their  estimated  net
          realizable  value.  There was no  revaluation  of  equipment  required
          during the same period of 1999.

     (iii)A  decrease  of $0.1  million  in  interest  expense  was due to lower
          average debt balances  outstanding  during the three months ended June
          30, 2000, compared to the same period in 1999.

     (iv) A $0.1  million  decrease in  administrative  expenses  was due to the
          reduction of the size of the Partnership's equipment portfolio.

     (v)  A decrease  of $49,000  in bad debt  expense  from 1999 was due to the
          collection of $0.1 million during the second quarter of 2000 from past
          due receivables that had previously been reserved for as a bad debt.

(C)  Net Gain on Disposition of Owned Equipment

The net gain on the  disposition  of owned  equipment for the second  quarter of
2000 was $8,000, resulting from the disposition of marine containers,  railcars,
and trailers,  with an aggregate  net book value of $0.1 million,  for aggregate
proceeds of $0.1 million. The net gain on the disposition of owned equipment for
the second quarter of 1999 was $0.5 million,  resulting from the  disposition of
marine containers,  railcars, and trailers,  with an aggregate net book value of
$0.1 million, for aggregate proceeds of $0.6 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 June 30,
                                                         2000             1999
                                               --------------------------------

  Marine vessel                                $           (13 ) $          --
  Aircraft, aircraft engines, and rotables                  --               4
                                               --------------------------------
      Equity in net income (loss) of USPEs     $           (13 ) $           4
                                               =================================

Marine  vessel:  The  Partnership's  share of  revenues  and  expenses of marine
vessels was $0.3 million and $0.3 million,  respectively,  for the quarter ended
June 30, 2000, compared to zero for the same period of 1999.

The increase in marine  vessel lease  revenues of $0.3 million and  depreciation
expense, direct expenses, and administrative expenses of $0.3 million during the
three months ended June 30, 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 three months ended June 30, 1999.

Aircraft,  aircraft engines, and rotables:  As of June 30, 2000, the Partnership
had no remaining interests in entities that owned aircraft, aircraft engines, or
rotables.  The  Partnership's  share of aircraft  revenues  and expenses for the
quarter ended June 30, 2000 were zero, compared to $1,000 and a credit of $3,000
respectively, during the same period of 1999.

(E)  Net Income

As a result of the foregoing,  the  Partnership had a net income of $0.4 million
in the second  quarter  of 2000  compared  to net income of $0.7  million in the
second  quarter of 1999.  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 June 30, 2000 is not necessarily indicative of future periods.

COMPARISON OF THE PARTNERSHIP'S  OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE
30, 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  during the six months  ended June 30, 2000 when  compared to the same
period of 1999.  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 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 Six Months
                                                           Ended June 30,
                                                        2000             1999
                                            ------------------------------------

  Railcars                                   $         2,475   $         2,660
  Aircraft                                             2,219             2,810
  Trailers                                               196               229
  Marine containers                                       52                70
  Marine vessel                                           --               446

Railcars: Railcars lease revenues and direct expenses were $3.4 million and $0.9
million,  respectively, for the six months ended June 30, 2000, compared to $3.5
million and $0.8  million,  respectively,  during the same  period of 1999.  The
decrease in lease revenues  resulted from  dispositions  of railcars during 2000
and 1999.  The increase in direct  expenses of $0.1 million was a result of more
repairs being  required on rail  equipment in the six months ended June 30, 2000
than was needed during the six months ended June 30, 1999.

Aircraft: Aircraft lease revenues and direct expenses were $2.4 million and $0.2
million,  respectively, for the six months ended June 30, 2000, compared to $3.0
million and $0.2 million,  respectively,  during the same period of 1999.  Lease
revenues  decreased  $0.6 million during the six months ended June 30, 2000 when
compared to the same  period in 1999 due to the sale of an  aircraft  during the
fourth quarter of 1999.

Trailers:  Trailer lease revenues and direct expenses were $0.3 million and $0.1
million,  respectively, for the six months ended June 30, 2000, compared to $0.3
million and $0.1  million,  respectively,  during the same  period of 1999.  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  $1,000,  respectively,  for the six months  ended  June 30,  2000,
compared to $0.1  million and  $1,000,  respectively,  during the same period of
1999.  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.

Marine vessel:  There were no marine vessel lease  revenues and direct  expenses
for the six months  ended  June 30,  2000,  compared  to $0.9  million  and $0.5
million, respectively, during the same period of 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 six months ended
June 30,  2000,  lease  revenues  decreased  $0.9  million  and direct  expenses
decreased $0.5 million when compared to the same period of 1999.

(B)  Indirect Operating Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $4.0 million for the six months ended June 30, 2000
decreased from $5.8 million for
the same period of 1999.  Significant variances are explained as follows:

     (i) A decrease of $1.2 million in depreciation  and  amortization  expenses
         from 1999 levels  reflects the decrease of $0.8 million due to the sale
         or  disposition of certain  Partnership  assets during 2000 and 1999. A
         decrease of $0.4 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)Loss on revaluation of equipment  increased $0.2 million during the six
         months ended June 30, 2000 and resulted from the  Partnership  reducing
         the carrying value of trailers to their estimated net realizable value.
         There was no revaluation of equipment  required  during the same period
         of 1999.

   (iii) A decrease  of $0.3  million  in  interest  expense  was due to lower
         average debt balances  outstanding during the six months ended June 30,
         2000 when compared to the same period of 1999.

     (iv)A decrease of $0.2 million in general and administrative  expenses from
         1999 levels was due to the  reduction of the size of the  Partnership's
         equipment portfolio.

     (v) A decrease of $0.1 million in bad debt expense from 1999 was due to the
         collection  of $0.1  million  during the six months ended June 30, 2000
         from past due  receivables  that had previously  been reserved for as a
         bad debt. The decrease was also due to the General Partner's evaluation
         of the collectability of receivables due from certain lessees.

     (vi)A decrease of $0.1 million in  management  fees to affiliate  from 1999
         levels was due to lower lease revenues during the six months ended June
         30, 2000, compared to the same period of 1999.

(C)  Net Gain on Disposition of Owned Equipment

The net gain on the  disposition  of  equipment  was  $45,000 for the six months
ended  June 30,  2000,  resulting  from the  disposition  of marine  containers,
trailers,  and railcars with an aggregate  net book value of $0.2  million,  for
aggregate proceeds of $0.2 million. The net gain on the disposition of equipment
was $0.5  million for the six months  ended June 30,  1999,  resulting  from the
disposition of marine containers,  trailers,  and railcars with an aggregate net
book value of $0.1 million, for aggregate proceeds of $0.6 million.


<PAGE>


(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 Six Months
                                                           Ended June 30,
                                                           2000         1999
                                               ---------------------------------

  Aircraft, aircraft engines, and rotables     $            22   $       1,477
  Marine vessel                                           (107 )            --
                                               =================================
      Equity in net income (loss) of USPEs     $           (85 ) $       1,477
                                               =================================

Aircraft,  aircraft engines, and rotables:  As of June 30, 2000, the Partnership
had no remaining interests in entities that owned aircraft, aircraft engines, or
rotables.  The Partnership's share of aircraft revenues and expenses was $22,000
and zero, respectively, for the six months ended June 30, 2000, compared to $1.6
million and $0.1  million,  respectively,  during the same  period of 1999.  The
$22,000 of aircraft  revenues for the six months ended June 30, 2000 represented
interest  income  earned  during  the  first  six  months  of 2000  on  accounts
receivable.  The $1.6 million in revenue in 1999  represented  the gain from the
sale of the equipment in two trusts during the first quarter of 1999.

Marine vessel: The Partnership's  share of revenues and expenses from the marine
vessel was $0.5 million and $0.6 million, respectively, for the six months ended
June 30, 2000, compared to zero for the same period of 1999.

The increase in marine  vessel lease  revenues of $0.5 million and  depreciation
expense, direct expenses, and administrative expenses of $0.6 million during the
six months ended June 30, 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 six months ended June 30, 1999.

(E)  Net Income

As a result of the foregoing, the Partnership had net income of $1.0 million for
the six months ended June 30, 2000,  compared to a net income of $2.4 million in
the same period of 1999.  The  Partnership's  ability to operate,  or  liquidate
assets,  secure leases, and re-lease those assets whose leases expire is subject
to many factors.  Therefore,  the  Partnership's  performance  in the six months
ended June 30, 2000 is not necessarily indicative of future periods.

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

For the six months ended June 30, 2000, the Partnership generated operating cash
of $3.7 million (net cash provided by operating activities, plus non-liquidating
distributions from USPEs) to meet its operating obligations.

During the six months ended June 30, 2000, the Partnership  sold owned equipment
received aggregate proceeds of $0.2 million.

During the six months ended June 30, 2000, accounts payable and accrued expenses
decreased $0.7 million.  A $0.4 million  decrease in trade accounts  payable was
due to the reduction of the size of the  Partnership's  equipment  portfolio.  A
$0.3 million decrease in accrued expenses was due to the payment of $0.3 million
in the first six months of 2000 for repairs to an aircraft, which was accrued at
December 31, 1999. A similar accrual was not required on June 30, 2000.

During the six months  ended June 30, 2000,  due to  affiliates  increased  $4.0
million due to increased Partnership borrowings from the General Partner.

During the six months  ended June 30,  2000,  lessee  deposits  and reserves for
repairs  increased  $0.3  million due to an increase in reserves for repairs for
two aircraft.

PLM Financial  Services,  Inc. (FSI or 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 to that mentioned above.

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 potential 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.

On April 18,  2000,  the General  Partner  for the  Partnership  announced  that
effective  immediately,  it will not recognize any further  transfers  involving
trading of units in this  partnership  for the  remainder  of the 2000  calendar
year. PLM Equipment Growth Fund III (hereafter referred to as "the Partnership")
is listed on the OTC Bulletin Board under the symbol GFZPZ.

In making the announcement,  the General Partner cited the Partnership's need to
continue to comply with Internal Revenue Service (IRS) Notice 88-75 and IRS Code
Section 7704, which contain safe harbor provisions  regarding 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.  Transfers  for the  remainder  of the  year  may  only be  processed,
pursuant to IRS Code Section 7704,  through a qualified  matching  service.  The
General Partner will also continue to recognize transfers  specifically excluded
from the safe harbor  limitations,  referred to in the regulations as "transfers
not involving  trading," which includes  transfers at death,  transfers  between
family  members,   and  transfers  involving   distributions  from  a  qualified
retirement plan.

(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  anticipates that
the  liquidation  of  Partnership  assets  will be  completed  by the  scheduled
termination of the Partnership at the end of the year 2000.

Several  factors  may  affect the  Partnership's  operating  performance  in the
remainder  of 2000,  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 and its  investment in a USPE 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 2000 include:

1.   One of the Partnership's  aircraft has been off-lease for approximately two
     years.  This Stage II aircraft  required  extensive repairs and maintenance
     and the Partnership has had difficulty selling the aircraft.  This aircraft
     will remain  off-lease  until it is sold.  During the six months ended June
     30,  2000,  the  Partnership  received a $0.1 million  refundable  security
     deposit from a potential buyer of the Partnership's Boeing 737-200 Stage II
     commercial aircraft.

2.   The cost of new marine  containers  has been at historic  lows for the past
     several years which has caused  downward  pressure on per diem lease rates.
     Recently,  the cost of marine containers have started to increase which, if
     this trend continues, should translate into rising per diem lease rates.

3.   Depressed  economic  conditions in Asia have led to declining freight rates
     through 2000 for dry bulk marine vessels.  In the absence of new additional
     orders, the market would be expected to stabilize and improve over the next
     2-3 years.

4.   Railcar  loading in North  America  have  continued  to be high,  however a
     softening  in the market is  expected  during  2000,  which  leads to lower
     utilization  and 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  and  proceeds  from
disposition of equipment to satisfy its operating requirements, maintain working
capital reserves, and pay cash distributions to the investors.

(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 six months ended June 30, 2000, 81% 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 (U.S.)  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.


<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

                                    By: PLM Financial Services, Inc.
                                        General Partner




Date:  August 4, 2000               By: /s/ Richard K Brock
                                    -------------------------------------------
                                    Richard K Brock
                                    Vice President and
                                    Chief Financial Officer