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, 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.)

         120 Montgomery Street
     Suite 1350, San Francisco, CA                               94104
         (Address of principal                                (Zip code)
          executive offices)


       Registrant's telephone number, including area code: (415) 445-3201
                             -----------------------


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,
                                                                                          2001                 2000
                                                                                     ------------------------------------
<S>                                                                                   <C>                 <C>
ASSETS

Equipment held for operating lease, at cost                                           $     39,018        $     40,028
Less accumulated depreciation                                                              (34,256 )           (34,361)
                                                                                      -----------------------------------
                                                                                             4,762               5,667
Equipment held for sale                                                                         --               1,703
                                                                                      -----------------------------------
  Net equipment                                                                              4,762               7,370

Cash and cash equivalents                                                                    8,259               1,832
Restricted cash                                                                                 --                 125
Accounts receivable, net of allowance for doubtful
    accounts of $551 in 2001 and $455 in 2000                                                  314                 591
Investments in unconsolidated special-purpose entity                                            --                  76
Prepaid expenses and other assets                                                               45                  43
                                                                                      -----------------------------------

    Total assets                                                                      $     13,380        $     10,037
                                                                                      ===================================

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
Accounts payable and accrued expenses                                                 $        311        $        462
Due to affiliates                                                                               68                  72
Lessee deposits and reserves for repairs                                                         8                 187
                                                                                      -----------------------------------
  Total liabilities                                                                            387                 721
                                                                                      -----------------------------------

Partners' capital:
Limited partners (9,871,210 depositary units as
    of June 30, 2001 and December 31, 2000)                                                 12,993               9,316
General Partner                                                                                 --                  --
                                                                                      -----------------------------------
  Total partners' capital                                                                   12,993               9,316
                                                                                      -----------------------------------

    Total liabilities and partners' capital                                           $     13,380        $     10,037
                                                                                      ===================================
</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,
                                                                  2001            2000                2001            2000
                                                               ----------------------------        ---------------------------
<S>                                                            <C>             <C>                 <C>            <C>
REVENUES

Lease revenue                                                  $   1,705       $   3,014           $   3,675      $    6,168
Interest and other income                                            116              28                 169              42
Net gain on disposition of equipment                                 142               8               3,984              45
                                                               ----------------------------        ---------------------------
  Total revenues                                                   1,963           3,050               7,828           6,255
                                                               ----------------------------        ---------------------------

EXPENSES

Depreciation and amortization                                        434           1,369               1,035           2,757
Repairs and maintenance                                              531             706               1,091           1,161
Equipment operating expenses                                          10               8                  18              16
Insurance expense                                                     25              34                  96              69
Management fees to affiliate                                         116             171                 235             350
Interest expense                                                      --             117                  --             267
General and administrative expenses to affiliates                     86              91                 250             204
Other general and administrative expenses                            268             199                 697             496
Loss on revaluation of equipment                                      --             191                  --             191
Provision for (recovery of) bad debts                                 66             (62)                 96            (105)
                                                               ----------------------------        ---------------------------
  Total expenses                                                   1,536           2,824               3,518           5,406
                                                               ----------------------------        ---------------------------

Equity in net loss of unconsolidated
    special-purpose entities                                          --             (13)                (10 )           (85)
                                                               ----------------------------        ---------------------------

    Net income                                                 $     427       $     213           $   4,300             764
                                                               ============================        ===========================

PARTNERS' SHARE OF NET INCOME

Limited partners                                               $     396       $     213           $   4,269      $      764
General Partner                                                       31              --                  31              --
                                                               ----------------------------
                                                                                                   ---------------------------

    Total                                                      $     427       $     213           $   4,300      $      764
                                                               ============================        ===========================

Limited partners net income per weighted-average
  depositary unit                                              $    0.04       $    0.02           $    0.43      $     0.08
                                                               ============================        ===========================

Cash distribution                                              $     623       $      --           $     623      $       --
                                                               ============================        ===========================

Cash distribution per weighted-average
    depositary unit                                            $    0.06       $      --           $    0.06      $       --
                                                               ============================        ===========================
</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, 1999 to June 30, 2001
                            (in thousands of dollars)

<TABLE>
<CAPTION>


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

<S>                                                   <C>                <C>             <C>
  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                                                 4,269             31               4,300

Cash distribution                                           (592)           (31)               (623)
                                                      ------------------------------------------------

  Partners' capital as of June 30, 2001               $   12,993         $   --          $   12,993
                                                      ================================================
</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,
                                                                                                   2001            2000
                                                                                               -----------------------------
<S>                                                                                             <C>             <C>
OPERATING ACTIVITIES

Net income                                                                                      $    4,300      $      764
Adjustments to reconcile net income to net cash provided by (used in)
    operating activities:
  Depreciation and amortization                                                                      1,035           2,757
  Loss on revaluation of equipment                                                                      --             191
  Net gain on disposition of equipment                                                              (3,984)            (45)
  Equity in net loss from unconsolidated special-purpose entities                                       10              85
  Changes in operating assets and liabilities:
    Accounts receivable, net                                                                           277              96
    Prepaid expenses and other assets                                                                   (2)             34
    Restricted cash                                                                                    125              --
    Accounts payable and accrued expenses                                                             (151)           (653)
    Due to affiliates                                                                                   (4)             14
    Lessee deposits and reserves for repairs                                                          (179)            250
                                                                                                -----------------------------
      Net cash provided by operating activities                                                      1,427           3,493
                                                                                                -----------------------------

INVESTING ACTIVITIES

Payments for capitalized improvements                                                                  (54)            (11)
Distributions from unconsolidated special-purpose entities                                              66             178
Distributions from liquidation of unconsolidated special-purpose entity                                 --              --
Proceeds from disposition of equipment                                                               5,611             206
                                                                                                -----------------------------
      Net cash provided by investing activities                                                      5,623             373
                                                                                                -----------------------------

FINANCING ACTIVITIES

Principal payments on note payable                                                                      --          (7,458)
Due from affiliates                                                                                     --           3,950
Cash distributions paid to limited partners                                                           (592)             --
Cash distributions paid to General Partner                                                             (31)             --
                                                                                                -----------------------------
      Net cash used in financing activities                                                           (623)         (3,508)
                                                                                                -----------------------------

Net increase in cash and cash equivalents                                                            6,427             358
Cash and cash equivalents at beginning of period                                                     1,832             486
                                                                                                -----------------------------
Cash and cash equivalents at end of period                                                      $    8,259      $      844
                                                                                                =============================

SUPPLEMENTAL INFORMATION

Interest paid                                                                                   $       --      $      220
                                                                                                =============================
</TABLE>







                 See accompanying notes to financial statements.

<PAGE>



                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 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 June 30, 2001 and December 31, 2000, the
     statements  of income for the three  months  and six months  ended June 30,
     2001 and 2000,  the  statements  of changes in  partners'  capital  for the
     period from December 31, 1999 to June 30, 2001,  and the statements of cash
     flows for the six months ended June 30, 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. For the
     three and six months  ended June 30,  2001,  cash  distributions  were $0.6
     million.  There  were no cash  distributions  for the three and six  months
     ended June 30, 2000. None of the cash distributions in the six months ended
     June 30, 2001 were considered a return of capital.

4.   TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES

     The balance due to  affiliates  as of June 30, 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 June 30, 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 affiliated expenses incurred by
     the unconsolidated  special-purpose entities during 2001 and 2000 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,
                                                     2001            2000              2001            2000
                                                   -------------------------------------------------------------

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


<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

5.   EQUIPMENT

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

<TABLE>
<CAPTION>
                                                                  June 30,              December 31,
                                                                   2001                  2000
                                                              --------------------------------------



<S>                                                            <C>                   <C>
Rail equipment                                                 $    32,855           $    33,370
Trailers                                                             3,240                 3,428
Marine containers                                                    2,923                 3,230
                                                               -------------------------------------
                                                                    39,018                40,028
Less accumulated depreciation                                      (34,256)              (34,361)
                                                               -------------------------------------
                                                                     4,762                 5,667
Equipment held for sale                                                 --                 1,703
                                                               -------------------------------------
    Net equipment                                              $     4,762           $     7,370
                                                               =====================================
</TABLE>


     As of June 30, 2001,  all  equipment in the  Partnership  portfolio  was on
     lease except for 77 railcars.  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 June 30, 2001 and  December  31,
     2000, respectively.

     Capital  improvements to the  Partnership's  equipment of $54,000 were made
     during the six months  ended June 30,  2001.  Capital  improvements  to the
     Partnership's  equipment  of $11,000  were made during the six months ended
     June 30, 2000.

     During the six months ended June 30, 2001, the Partnership sold or disposed
     of aircraft,  marine containers,  trailers, and railcars, with an aggregate
     net book value of $1.6 million, for aggregate proceeds of $5.6 million. The
     aircraft was  reported as equipment  held for sale as of December 31, 2000.
     During the six months  ended June 30,  2000,  the  Partnership  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,  2000,  the  Partnership  reduced the
     carrying  value of  refrigerated  and dry  trailers by $0.2  million to the
     equipment's  estimated  realizable  value.  There were no  revaluations  of
     equipment required in the six months ended June 30, 2001.

6.   INVESTMENTS IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITY

     The net investment in USPE's included the following jointly-owned equipment
     (and related assets and liabilities) (in thousands of dollars):
<TABLE>
<CAPTION>
                                                                               June 30,           December 31,
                                                                               2001               2000
                                                                          ----------------------------------

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



<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

7.   OPERATING SEGMENTS

     The Partnership operates or operated 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
                                           Aircraft  Railcar    Container  Trailer
     For the quarter ended June 30, 2001   Leasing   Leasing     Leasing   Leasing   All Other(1)  Total
     -----------------------------------   -------   -------     -------   -------   ---------     -----

<S>                                        <C>       <C>        <C>       <C>        <C>       <C>
     REVENUES
       Lease revenue                       $     --  $  1,598   $     11  $     96   $     --  $  1,705
       Interest income and other                 33        --         --        --         83       116
       Net gain on disposition of
         equipment                               --       134          8        --         --       142
                                           -------------------------------------------------------------
         Total revenues                          33     1,732         19        96         83     1,963

     COSTS AND EXPENSES
       Operations support                         2       492         --        55         17       566
       Depreciation and amortization             --       393          7        34         --       434
       Management fees                            2       109         --         5         --       116
       General and administrative expenses       68        78         --        18        190       354
       Provision for bad debts                   --        66         --        --         --        66
                                           -------------------------------------------------------------
         Total costs and expenses                72     1,138          7       112        207     1,536
                                           -------------------------------------------------------------
                                           -------------------------------------------------------------
     Net income (loss)                     $    (39 )$    594   $     12  $    (16)  $   (124 )$    427
                                           =============================================================

     Total assets as of June 30, 2001      $     --  $  4,096   $    119  $    861   $  8,304  $ 13,380
                                           =============================================================
</TABLE>
<TABLE>
<CAPTION>


                                                                Marine     Marine
                                           Aircraft Railcar     Vessel    Container  Trailer
     For the quarter ended June 30, 2000   Leasing   Leasing    Leasing    Leasing   Leasing   All Other(1) Total
     -----------------------------------   -------   -------    -------    -------   -------   ---------    -----
<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES
       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
       Loss on revaluation of equipment          --        --         --         --       191        --        191
       Recovery of bad debts                     --       (52)        --         --        --       (10)       (62)
                                           ------------------------------------------------------------------------
         Total costs and expenses             1,126     1,052         --         22       328       296      2,824
                                           ------------------------------------------------------------------------
     Equity in net loss of USPE's                --        --        (13 )       --        --        --        (13)
                                           ------------------------------------------------------------------------
     Net income (loss)                     $     98  $    582   $    (13) $       5  $   (186) $   (273)  $    213
                                           ========================================================================

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



(1)  Includes 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.
</TABLE>


<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

7.   OPERATING SEGMENTS (continued)
<TABLE>
<CAPTION>
                                                                Marine     Marine
                                           Aircraft  Railcar    Vessel    Container   Trailer
     For the six months ended June 30,     Leasing   Leasing    Leasing    Leasing    Leasing   All Other(1)   Total
     ----------------------------------    -------   -------    -------    -------    -------   ---------      -----
     2001
     ----
<S>                                        <C>       <C>        <C>         <C>       <C>        <C>         <C>
     REVENUES
       Lease revenue                       $    185  $  3,278   $      --   $     23  $    189   $     --    $  3,675
       Interest income and other                 39        --          --         --        --        130         169
       Net gain on disposition of
         equipment                            3,699       224          --         40        21         --       3,984
                                           ---------------------------------------------------------------------------
         Total revenues                       3,923     3,502          --         63       210        130       7,828

     COSTS AND EXPENSES
       Operations support                        27     1,001          --         --       100         77       1,205
       Depreciation and amortization            151       788          --         16        80         --       1,035
       Management fees                            4       220          --          1        10         --         235
       General and administrative expenses      215       130          --         --        38        564         947
       Provision for bad debts                   --        96          --         --        --         --          96
                                           ---------------------------------------------------------------------------
         Total costs and expenses               397     2,235          --         17       228        641       3,518
                                           ---------------------------------------------------------------------------
     Equity in net loss of USPE's                --        --         (10)        --        --         --         (10)
                                           ---------------------------------------------------------------------------
     Net income (loss)                     $  3,526  $  1,267   $     (10)  $     46  $    (18)  $   (511)   $  4,300
                                           ===========================================================================

     Total assets as of June 30, 2001      $     --  $  4,096   $      --   $    119  $    861   $  8,304    $ 13,380
                                           ===========================================================================
</TABLE>
<TABLE>
<CAPTION>

                                                                 Marine    Marine
                                           Aircraft  Railcar    Vessel    Container  Trailer
     For the six months ended June 30,     Leasing   Leasing    Leasing    Leasing   Leasing   All Other(1)  Total
     ----------------------------------    -------   -------    -------    -------   -------   ---------     -----
     2000
     ----
<S>                                        <C>       <C>        <C>         <C>       <C>        <C>         <C>
     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
       Loss on revaluation of equipment          --        --          --         --       191         --         191
       Recovery of bad debts                     --       (94)         --         --        (1)       (10)       (105)
                                           ---------------------------------------------------------------------------
         Total costs and expenses             2,125     1,995          --         46       481        759       5,406
                                           ---------------------------------------------------------------------------
     Equity in net income (loss) of USPE's       22        --        (107)        --        --         --         (85)
                                           ---------------------------------------------------------------------------
     Net income (loss)                     $    326  $  1,434   $    (107)  $     20  $   (187)  $   (722)   $    764
                                           ===========================================================================

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





(1)  Includes 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.
</TABLE>


<PAGE>


                          PLM EQUIPMENT GROWTH FUND III
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2001

8.   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, 2001 and 2000 was 9,871,210.

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  contract.  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  Partnership
     believes the likelihood of an unfavorable outcome from the counterclaims is
     remote.

     The  Partnership  is involved as plantiff  or  defendant  in various  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.  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 and
     second quarters 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 cases,  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, 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 June 30, 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 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):
<TABLE>
<CAPTION>
                                                      For the Three Months
                                                         Ended June 30,
                                                    2001               2000
                                               -------------------------------------

<S>                                            <C>                <C>
Railcars                                       $         1,106    $         1,110
Trailers                                                    41                 83
Marine containers                                           11                 20
Aircraft                                                    (2)             1,063
</TABLE>

Railcars:  Railcar lease revenues and direct expenses were $1.6 million and $0.5
million, respectively, for the quarters ended June 30, 2001 and 2000.

Trailers:  Trailer lease revenues and direct expenses were $0.1 million and $0.1
million,  respectively,  for the  quarters  ended  June 30,  2001 and 2000.  The
decrease in trailer  contribution  in the second  quarter of 2001 was due to the
disposition of trailers in 2000 and 2001.

Marine  containers:  Marine  container  lease revenues and direct  expenses were
$11,000 and $-0- respectively,  for the quarter ended June 30, 2001, compared to
$21,000 and $1,000,  respectively,  during the same period of 2000. The decrease
in marine  container  contribution  in the second quarter of 2001 was due to the
disposition of marine containers in 2000 and 2001.

Aircraft:  Aircraft  lease  revenues  and direct  expenses  were $0 and  $2,000,
respectively,  for the quarter ended June 30, 2001, compared to $1.2 million and
$0.2  million,  respectively,  during the same  period of 2000.  Lease  revenues
decreased  $1.2 million  during the three months ended June 30, 2001 compared to
the  same  period  in  2000  due to the  sale  of  the  Partnership's  remaining
wholly-owned aircraft during the first quarter of 2001.

(B) Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $1.0  million  for the quarter  ended June 30, 2001
decreased from $2.1 million for the same period of 2000.  Significant  variances
are explained as follows:

     (i)  A decrease of $0.9 million in depreciation and  amortization  expenses
          from 2000 levels due to the sale or disposition of Partnership  assets
          during 2001 and 2000.

     (ii) Loss on  revaluation  of equipment  decreased  $0.2 million during the
          three  months ended June 30, 2001 and  resulted  from the  Partnership
          reducing  the  carrying  value  of  trailers  to their  estimated  net
          realizable  value during the three  months ended June 30, 2000.  There
          was no  revaluation  of equipment  required  during the same period of
          2001.

     (iii) A decrease  of  $0.1  million  in  interest  expense  was  due to the
          repayment of the Partnership's debt during 2000.

     (iv) A $0.1 million increase in bad debt expense from the second quarter of
          2000 was due to the General Partner's evaluation of the collectability
          of receivables due from certain lessees and a $43,000 increase was due
          to the  recovery  of a bad debt  previously  reserved  for.  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 second  quarter of
2001 was $0.1 million,  resulting from the disposition of marine  containers and
railcars, with an aggregate net book value of $48,000, for aggregate proceeds of
$0.2 million.  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.

(D) Equity in Net Loss of Unconsolidated Special-Purpose Entities (USPE's)

Net 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):
<TABLE>
<CAPTION>
                                                    For the Three Months
                                                       Ended June 30,
                                                  2001               2000
                                             -------------------------------------

<S>                                          <C>                <C>
Marine vessel                                $            --    $           (13)
                                             -------------------------------------
    Equity in net loss of USPE's             $            --    $           (13)
                                             =====================================
</TABLE>

Marine vessel: As of June 30, 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 $0 for the quarter ended June 30, 2001,  compared
to $0.3 million and $0.3 million, respectively, for the same period of 2000. The
decrease in revenues  and  expenses of marine  vessels in the second  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 $0.4 million
in the second  quarter  of 2001  compared  to net income of $0.2  million in the
second  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 June 30, 2001 is not  necessarily  indicative  of future  periods.  In the
second quarter of 2001, the Partnership  distributed $0.6 million to the limited
partners, or $0.06 per weighted-average depository unit.

COMPARISON OF THE PARTNERSHIP'S  OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE
30, 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 six months  ended June 30, 2001 when  compared to the same
period of 2000.


<PAGE>


The following  table presents lease revenues less direct expenses by segment (in
thousands of dollars):
<TABLE>
<CAPTION>
                                                     For the Six Months
                                                       Ended June 30,
                                                  2001               2000
                                             -------------------------------------

<S>                                          <C>                <C>
Railcars                                     $         2,277    $         2,475
Aircraft                                                 158              2,219
Trailers                                                  89                196
Marine containers                                         23                 52
</TABLE>

Railcars: Railcars lease revenues and direct expenses were $3.3 million and $1.0
million,  respectively, for the six months ended June 30, 2001, compared to $3.4
million and $0.9  million,  respectively,  during the same  period of 2000.  The
decrease in railcar  contribution  in the six months ended June 30, 2001 was due
to a decrease  in railcar  utilization  in 2001,  compared to the same period in
2000.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.2 million and
$27,000,  respectively, for the six months ended June 30, 2001, compared to $2.4
million and $0.2 million, respectively, during the same period of 2000. The $2.1
decrease  in  aircraft  contribution  during the six months  ended June 30, 2001
compared to the same period in 2000 is due to the sale of an aircraft during the
first quarter of 2001.

Trailers:  Trailer lease revenues and direct expenses were $0.2 million and $0.1
million,  respectively, for the six months ended June 30, 2001, compared to $0.3
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 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
$23,000 and $0,  respectively,  for the six months ended June 30, 2001, compared
to $0.1 million and $1,000,  respectively,  during the same period of 2000.  The
number of marine  containers  owned by the Partnership has been declining due to
sales and  dispositions.  The result of this  declining  fleet is a decrease  in
marine container contribution.

(B) Indirect Operating Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $2.3 million for the six months ended June 30, 2001
decreased from $4.2 million for the same period of 2000.  Significant  variances
are explained as follows:

     (i)  A decrease of $1.7 million in depreciation and  amortization  expenses
          from 2000 levels due to the  disposition of Partnership  assets during
          2001 and 2000.

     (ii) A  decrease  of  $0.3  million  in  interest  expense  was  due to the
          repayment of the Partnership's debt during 2000.

     (iii) Loss on  revaluation of equipment  decreased  $0.2 million during the
          six  months  ended June 30,  2001 and  resulted  from the  Partnership
          reducing  the  carrying  value  of  trailers  to their  estimated  net
          realizable  value during the six months ended June 30, 2000. There was
          no revaluation of equipment required during the same period of 2001.

     (iv) A decrease of $0.1 million in management  fees to affiliate  from 2000
          levels was due to lower  lease  revenues  during the six months  ended
          June 30, 2001, compared to the same period of 2000.

     (v)  A increase of $0.2 million 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.

     (vi) A increase  of $0.2  million  in bad debt  expense  from 2000.  A $0.1
          million  increase was due to the General  Partner's  evaluation of the
          collectability  of  receivables  due from  certain  lessees and a $0.1
          million  increase was due to recovery of bad debt previously  reserved
          for during the six months of 2000. A similar recovery did not occur in
          the six months ended June 30, 2001.


<PAGE>



(C) Net Gain on Disposition of Owned Equipment

The net gain on the disposition of equipment was $4.0 million for the six months
ended  June  30,  2001,  resulting  from the  disposition  of  aircraft,  marine
containers,  trailers,  and railcars  with an  aggregate  net book value of $1.6
million, for aggregate proceeds of $5.6 million. 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.

(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):
<TABLE>
<CAPTION>
                                                     For the Six Months
                                                       Ended June 30,
                                                  2001               2000
                                             -------------------------------------

<S>                                          <C>                <C>
Aircraft, aircraft engines, and rotables     $            --    $            22
Marine vessel                                            (10)              (107)
                                             -------------------------------------
    Equity in net (loss) of USPE's           $           (10)   $           (85)
                                             =====================================
</TABLE>

Aircraft,  aircraft engines, and rotables:  As of June 30, 2001, the Partnership
had no remaining interests in entities that owned aircraft, aircraft engines, or
rotables.  The  Partnership  had no  revenues  or  expenses in USPE's that owned
aircraft,  aircraft engines,  or rotables in the six months ended June 30, 2001.
The Partnership's share of aircraft revenues and expenses were $22,000 and zero,
respectively,  for the six months ended June 30,  2000.  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.

Marine vessel: As of June 30, 2001, the Partnership's 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 six
months  ended  June  30,  2001,  compared  to $0.5  million  and  $0.6  million,
respectively, for the same period of 2000. The decrease in revenues and expenses
of marine  vessels for the six months  ended June 30, 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 net income of $4.3 million for
the six months ended June 30, 2001,  compared to a net income of $0.8 million in
the same period of 2000.  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, 2001 is not necessarily  indicative of future periods. In the six
months  ended June 30, 2001,  the  Partnership  distributed  $0.6 million to the
limited partners or $0.06 per weighted average depository unit.

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

For the six months ended June 30, 2001, the Partnership generated operating cash
of $1.5 million (net cash provided by operating activities, plus non-liquidating
distributions   from  USPE's)  to  meet  its  operating   obligations  and  make
distributions  to the partners  (total of $0.6 million the six months ended June
30, 2001).

During the six months ended June 30, 2001, the Partnership  sold owned equipment
and received aggregate proceeds of $5.6 million.

During the six months ended June 30, 2001,  accounts  receivable  decreased $0.3
million,  due to the timing of cash  receipts and the increase in Allowance  for
Doubtful Accounts.

During the six months ended June 30, 2001, accounts payable and accrued expenses
decreased  $0.2 million due to the  reduction  of the size of the  Partnership's
equipment portfolio.

During the six months  ended June 30,  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. Additionally, a decrease
of $0.1 million in prepaid aircraft 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.  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.

(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 cost of new marine containers have been at historical lows for the past
     several  years  which has caused  downward  pressure  on the per diem lease
     rates for this type of equipment.

2.   Railcar loadings in North America for the six months ending 2001 were below
     those  of  2000.  This  decrease  has led 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  and cash  currently  held to satisfy  its  operating
requirements,  maintain working capital reserves,  and to pay cash distributions
to the unitholders.



<PAGE>


(IV) FORWARD-LOOKING INFORMATION

Except for the historical  information  contained herein 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, 2001, 76% 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 13, 2001                 By: /s/ Stephen M. Bess
                                       ----------------------------------------
                                       Stephen M. Bess
                                       President and
                                       Current Chief Accounting Officer