Exhibit 99.0



DiVall Income Properties 3, L.P.



QUARTERLY NEWS



|                                       |  |                    
|-------------------------------------- |  | -------------------
|A publication of The Provo Group, Inc. |  | SECOND QUARTER 2002



July 25, 2002



Dear Limited Partner:



We closed on three of the four properties in your Partnership on June 30, 2002. We are
distributing approximately 80% of the proceeds, while we continue to pursue the sale of the last property.



Our preference, as repeatedly stated over the last several years, was to sell all of the properties in one portfolio transaction. This strategy was not bringing us closer to liquidation, so we proposed sales to
different, but simultaneous purchasers. We almost accomplished our objective, but the Colorado Springs purchaser was not able to close. We had a dilemma  wait to close the other three properties until we found a buyer for the fourth and risk
losing our buyer for the three properties  or  close the three (including one vacant) and work diligently to find a buyer for the remaining property. We chose to close the three properties and distribute a significant portion of the
proceeds.



Buyers for the fourth property are scarce. We have now instructed
our broker to also market the property for lease. Why? Two reasons. First, with a good lease, we can expand interested purchasers to investors and secondly, we didnt want the market to feel they had the upper hand because we desperately had to
sell the property before year-end. We cant get a fair value for you being perceived as desperate.



We wanted to liquidate this Partnership in 2002, but it now appears unlikely. We hate to see the administrative costs continue, but thats the reality. What we will do is reduce our minimum management fee by 75%
(3 properties sold out of four) until a sale closes on the fourth property and the budgeted wind-up period commences. We hope by turning our meter down significantly, that we will eliminate some of the cash flow pressures that might make value
maximization difficult. Thank you again for your support and patience.



Sincerely,



Bruce A. Provo



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|PAGE 2 |  | DIVALL 3 |  | 1 Q 02



DISTRIBUTION HIGHLIGHTS





|  |  |                                                                         |  |                                                                                                                                                                                                                                                                                               
|- |  | ----------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $2,140,000 total amount distributed for the Second Quarter 2002.        |  |       $843.00 to $684.00 range of distributions per unit from the
first unit sold to the last unit sold before the offering closed (April 1992), respectively. [NOTE: Distributions are from both cash flow from operations and net cash activity from financing and investing
activities.]
| |  | $125 per unit for the Second Quarter. This amount is return of capital. | 



QUESTIONS &
ANSWERS



What was the final vote?



We are still tabulating votes and will continue to do so until the August 30thextension. However, through July 11, 2002 the count was at 73.01% FOR a sale and less than 1% AGAINST.



What is the status of the Colorado Springs property?



We are diligently pursuing a sale of this property in the most time efficient manner. We are
offering incentives for a quick close. We are advertising locally and nationally. We have cleaned up the property, done landscaping and enhanced are For Sale signage. We sent one of our employees to Colorado to meet with the broker and
work out some selling strategies. At this time, we do not have any purchase proposals.



When will I receive my next distribution?



As there is only
one property left, there will not be enough revenue collected to make a distribution in November. The next distribution will be the final distribution. This will occur only after the Colorado Springs property is sold.



Will I receive a newsletter in November as usual?



Yes, it will be mailed on November 15, 2002.



TO CONTACT US:



|        |  |                                                  
|------- |  | -------------------------------------------------
|MAIL:   |  | Investor Relations, 101 W. 11thStreet, Suite 1110
|        |  | Kansas City, MO 64105                            
|        | 
|PHONE:  |  | 800-547-7686 OR (816) 421-7444                   
|        | 
|FAX:    |  | (816)221.2130                                    
|        | 
|E-MAIL: |  | mevans@theprovogroup.com                         



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DIVALL INCOME PROPERTIES 3 L.P.

STATEMENTS OF INCOME AND CASH FLOW CHANGES

FOR THE THREE MONTH PERIOD ENDED
JUNE 30, 2002



|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|------------------------------------------------------------------- |  | ---------------------- | ---------- | - | --------------------- | - | ---------- | ------------- |  | - | ---------- | -
|                                                                    |  | PROJECTED              |            |   | ACTUAL                |   |            | VARIANCE      | 
|                                                                    |  | 2ND QUARTER 06/30/2002 |            |   | 2NDQUARTER 06/30/2002 |   |            | BETTER(WORSE) | 
|OPERATING REVENUES                                                  |  |                        |            |   |                       |   |            |               |  |   |            |  
|Rental income                                                       |  | $                      | 51,875     |   |                       | $ | 56,238     |               |  | $ | 4,363      |  
|Interest income                                                     |  |                        | 5,400      |   |                       |   | 2,133      |               |  |   | (3,267     | )
|Gain on Sale of Property                                            |  |                        | 0          |   |                       |   | 716,958    |               |  |   | 716,958    |  
|Other income                                                        |  |                        | 0          |   |                       |   | 304        |               |  |   | 304        |  
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|TOTAL OPERATING REVENUES                                            |  | $                      | 57,275     |   |                       | $ | 775,634    |               |  | $ | 718,359    |  
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|OPERATING EXPENSES                                                  |  |                        |            |   |                       |   |            |               |  |   |            |  
|Insurance                                                           |  | $                      | 1,224      |   |                       | $ | 1,225      |               |  | $ | (1         | )
|Management fees                                                     |  |                        | 17,757     |   |                       |   | 17,884     |               |  |   | (127       | )
|Overhead allowance                                                  |  |                        | 1,434      |   |                       |   | 1,549      |               |  |   | (115       | )
|Advisory Board                                                      |  |                        | 1,314      |   |                       |   | 1,313      |               |  |   | 1          |  
|Administrative                                                      |  |                        | 9,018      |   |                       |   | 9,638      |               |  |   | (620       | )
|Professional services                                               |  |                        | 7,270      |   |                       |   | 6,785      |               |  |   | 485        |  
|Auditing                                                            |  |                        | 10,750     |   |                       |   | 10,150     |               |  |   | 600        |  
|Legal                                                               |  |                        | 2,250      |   |                       |   | 11,881     |               |  |   | (9,631     | )
|Real Estate taxes                                                   |  |                        | 0          |   |                       |   | 12,062     |               |  |   | (12,062    | )
|Defaulted tenants                                                   |  |                        | 600        |   |                       |   | 1,100      |               |  |   | (500       | )
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|TOTAL OPERATING EXPENSES                                            |  | $                      | 51,617     |   |                       | $ | 73,586     |               |  | $ | (21,969    | )
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|INVESTIGATION AND RESTORATION EXPENSES                              |  | $                      | 0          |   |                       | $ | 11         |               |  | $ | (11        | )
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|NON-OPERATING EXPENSES                                              |  |                        |            |   |                       |   |            |               |  |   |            |  
|Depreciation                                                        |  | $                      | 14,647     |   |                       | $ | 14,647     |               |  | $ | (0         | )
|Amortization                                                        |  |                        | 264        |   |                       |   | 8,101      |               |  |   | (7,837     | )
|Commissions on sale of properties                                   |  |                        | 0          |   |                       |   | 164,650    |               |  |   | (164,650   | )
|Loss on disposition of properties                                   |  |                        | 0          |   |                       |   | 240,838    |               |  |   | (240,838   | )
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|TOTAL NON-OPERATING EXPENSES                                        |  | $                      | 14,911     |   |                       | $ | 428,236    |               |  | $ | (413,325   | )
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|TOTAL EXPENSES                                                      |  | $                      | 66,528     |   |                       | $ | 501,832    |               |  | $ | (435,304   | )
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|NET (LOSS) INCOME                                                   |  | $                      | (9,253     | ) |                       | $ | 273,802    |               |  | $ | 283,055    |  
|                                                                    |  |                        |           
|                                                                    |  |                        |            |   |                       |   |            | VARIANCE      | 
|OPERATING CASH RECONCILIATION:                                      |  |                        |            |   |                       |   |            |               |  |   |            |  
|Depreciation and amortization                                       |  |                        | 14,911     |   |                       |   | 22,748     |               |  |   | 7,837      |  
|Recovery of amounts previously written off                          |  |                        | 0          |   |                       |   | (268       | )             |  |   | (268       | )
|Gain on sale of property                                            |  |                        | 0          |   |                       |   | (716,958   | )             |  |   | (716,958   | )
|Loss on disposition of property                                     |  |                        | 0          |   |                       |   | 240,838    |               |  |   | 240,838    |  
|(Increase) Decrease in current assets                               |  |                        | 13,359     |   |                       |   | 10,734     |               |  |   | (2,625     | )
|Increase (Decrease) in current liabilities                          |  |                        | (14,479    | ) |                       |   | (20,065    | )             |  |   | (5,586     | )
|(Increase) Decrease in cash reserved for payables                   |  |                        | 14,516     |   |                       |   | 39,407     |               |  |   | 24,891     |  
|Advance from/(to) future cash flows for future distributions        |  |                        | 1,900      |   |                       |   | (405,100   | )             |  |   | (407,000   | )
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|Net Cash Provided From (Used in) Operating Activities               |  | $                      | 20,954     |   |                       | $ | (554,863   | )             |  | $ | (575,817   | )
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|CASH FLOWS (USED IN) FROM INVESTING AND FINANCING ACTIVITIES        |  |                        |            |   |                       |   |            |               |  |   |            |  
|Investment in Indemnification Trust (interest earnings)             |  |                        | (4,500     | ) |                       |   | (1,598     | )             |  |   | 2,902      |  
|Return of tenant security deposit                                   |  |                        | 0          |   |                       |   | (8,425     | )             |  |   | (8,425     | )
|Recovery of amounts previously written off                          |  |                        |            |   |                       |   | 268        |               |  |   | 268        |  
|Net sale proceeds from sale of properties                           |  |                        | 0          |   |                       |   | 2,705,978  |               |  |   | 2,705,978  |  
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|Net Cash Provided (used in) from Investing And Financing Activities |  | $                      | (4,500     | ) |                       | $ | 2,696,224  |               |  | $ | 2,700,724  |  
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|Total Cash Flow For Quarter                                         |  | $                      | 16,454     |   |                       | $ | 2,141,360  |               |  | $ | 2,124,906  |  
|                                                                    |  |                        |           
|Cash Balance Beginning of Period                                    |  |                        | 241,116    |   |                       |   | 233,248    |               |  |   | (7,868     | )
|Less 1st quarter distributions paid 5/02                            |  |                        | (15,000    | ) |                       |   | 0          |               |  |   | 15,000     |  
|Change in cash reserved for payables or distributions               |  |                        | (16,416    | ) |                       |   | 365,693    |               |  |   | 382,109    |  
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|Cash Balance End of Period                                          |  | $                      | 226,154    |   |                       | $ | 2,740,301  |               |  | $ | 2,514,147  |  
|                                                                    |  |                        |           
|Cash reserved for 2nd quarter L.P. distributions                    |  |                        | (15,000    | ) |                       |   | (2,140,000 | )             |  |   | (2,125,000 | )
|Cash advanced (reserved for) future distributions                   |  |                        | (55,000    | ) |                       |   | (445,000   | )             |  |   | (390,000   | )
|Cash reserved for payment of payables                               |  |                        | (24,193    | ) |                       |   | (23,238    | )             |  |   | 955        |  
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|Unrestricted Cash Balance End of Period                             |  | $                      | 131,961    |   |                       | $ | 132,063    |               |  | $ | 102        |  
|                                                                    |  |                        |            |   |                       |   |            |               |  |   |            |  
|                                                                    |  |                        |           
|                                                                    |  | PROJECTED              |            |   | ACTUAL                |   |            | VARIANCE      | 
|* Quarterly Distribution                                            |  | $                      | 15,000     |   |                       | $ | 2,140,000  |               |  | $ | 2,125,000  |  
|Mailing Date                                                        |  |                        | 08/15/2002 |   |                       |   | (enclosed  | )             |  |   |           |  

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|* | Refer to distribution letter for detail of quarterly distribution.
|- | ------------------------------------------------------------------