FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
                             SECTION 13 OR 15(d)

                                   Form 10-KSB
(Mark One)
[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 [No Fee Required]

                 For the fiscal year ended December 31, 2001

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 [No Fee Required]

             For the transition period from _________to _________

                         Commission file number 0-13192

                     ANGELES INCOME PROPERTIES, LTD. III
                (Name of small business issuer in its charter)

         California                                  95-3903984
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                   Identification No.)

                          55 Beattie Place, PO Box 1089
                       Greenville, South Carolina 29602
                   (Address of principal executive offices)

                   Issuer's telephone number (864) 239-1000

        Securities registered under Section 12(b) of the Exchange Act:

                                      None

        Securities registered under Section 12(g) of the Exchange Act:

                            Limited Partnership Units
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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___

Check if there is no disclosure  of delinquent  filers in response to Item 405
of  Regulation  S-B  contained  in  this  form,  and  no  disclosure  will  be
contained,  to the best of the  registrant's  knowledge in definitive proxy or
information  statements  incorporated  by  reference  in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year.  $874,000

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests as of December 31, 2001. No market exists for the limited  partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

<PAGE>

                                     PART I

Item 1.     Description of Business

Angeles Income  Properties,  Ltd. III (the  "Partnership"  or "Registrant") is a
publicly held limited partnership organized under the California Uniform Limited
Partnership  Act pursuant to a  partnership  agreement  dated May 26,  1983,  as
amended (hereinafter referred to as "the Agreement"). The Partnership's managing
general  partner is Angeles  Realty  Corporation  II, ("ARC II" or the "Managing
General  Partner") an affiliate of Apartment  Investment and Management  Company
("AIMCO") and previously a wholly-owned  subsidiary of MAE GP Corporation  ("MAE
GP").  Effective  February 25, 1998, MAE GP was merged into Insignia  Properties
Trust  ("IPT"),  which  was an  affiliate  of  Insignia  Financial  Group,  Inc.
("Insignia").  Effective February 26, 1999, IPT was merged into AIMCO. Thus, the
Managing General Partner is now a wholly-owned  subsidiary of AIMCO. The Elliott
Accommodation Trust and the Elliott Family Partnership, Ltd., California limited
partnerships,  were non-managing  general partners.  Effective December 31, 1997
the Elliott Family Partnership,  Ltd. acquired the Elliott Accommodation Trust's
general partner interest in the Registrant. On June 30, 2000, the Elliott Family
Partnership   sold  its   remaining   interest  to  AIMCO   Properties  LP  (the
"Non-Managing  General  Partner"),  a wholly  owned  subsidiary  of  AIMCO.  The
Managing  General  Partner  and the  Non-Managing  General  Partner  are  herein
collectively  referred to as the "General Partners".  The Partnership  Agreement
provides  that the  Partnership  is to  terminate  on  December  31, 2038 unless
terminated prior to such date.

The  Registrant  is engaged in the business of operating and holding real estate
properties for investment.  In 1984 and 1985, during its acquisition  phase, the
Registrant  acquired  one  existing  apartment  complex,  a mobile home park,  a
shopping center and invested in three joint ventures  which, in turn,  owned two
shopping  centers  and  one  industrial/distribution   complex.  The  Registrant
continues to own and operate the apartment  complex (see "Item 2. Description of
Property").

Commencing March 7, 1984, the Registrant  offered up to 160,000 units of Limited
Partnership Interest (the "Units"),  at a purchase price of $500 per Unit with a
minimum  purchase of 10 Units  ($5,000),  or 4 Units  ($2,000) for an Individual
Retirement  Account  pursuant  to  a  Registration   Statement  filed  with  the
Securities and Exchange Commission.

The offering  terminated  March 6, 1985. Upon  termination of the offering,  the
Registrant  sold 86,920  units  aggregating  $43,460,000.  The General  Partners
contributed  capital  in  the  amount  of  $1,000  for  a  1%  interest  in  the
Partnership.  Since its initial offering,  the Registrant has not received,  nor
are limited partners required to make, additional capital contributions.

The  Partnership  has  no  employees.  Property  management  and  administrative
services are provided by the Managing  General Partner and by agents retained by
the Managing General Partner.

The  real  estate  business  in which  the  Partnership  is  engaged  is  highly
competitive.  There are other  residential  properties within the market area of
the Partnership's  property.  The number and quality of competitive  properties,
including  those which may be managed by an affiliate  of the  Managing  General
Partner,  in such market area could have a material  effect on the rental market
for apartments  owned by the  Partnership  and the rents that may be charged for
such  apartments.  While the Managing  General  Partner and its  affiliates  own
and/or  control a significant  number of apartment  units in the United  States,
such units represent an insignificant percentage of total apartment units in the
United States and competition for the apartments is local.

Both the income and expenses of operating the property owned by the  Partnership
are subject to factors outside of the Partnership's  control, such as changes in
the supply and demand for  similar  properties  resulting  from  various  market
conditions, increases/decreases in unemployment or population shifts, changes in
the  availability of permanent  mortgage  financing,  changes in zoning laws, or
changes in patterns or needs of users. In addition,  there are risks inherent in
owning  and  operating  residential   properties  because  such  properties  are
susceptible  to the  impact of  economic  and other  conditions  outside  of the
control of the Partnership.

There have been, and it is possible there may be other, Federal, state and local
legislation  and  regulations   enacted   relating  to  the  protection  of  the
environment.  The Partnership is unable to predict the extent,  if any, to which
such new  legislation  or  regulations  might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.

The  Partnership  monitors its property for evidence of  pollutants,  toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental  testing has been performed which resulted in no material  adverse
conditions or liabilities.  In no case has the Partnership  received notice that
it is a potentially  responsible party with respect to an environmental clean up
site.

A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operations" included in "Item 6" of this Form
10-KSB.

Item 2.     Description of Property

The following table sets forth the Partnership's investment in its property:

                              Date of
Property                      Purchase    Type of Ownership        Use

Lake Forest Apartments        06/27/84      Fee ownership     Residential Rental
  Brandon, Mississippi                                        136 units

Schedule of Property

Set forth  below for the  Registrant's  property  is the gross  carrying  value,
accumulated  depreciation,  depreciable life, method of depreciation and Federal
tax basis.
<TABLE>
<CAPTION>

                    Gross
                   Carrying    Accumulated   Depreciable                 Federal
Property            Value      Depreciation      Life       Method      Tax Basis
                       (in thousands)                                (in thousands)

Lake Forest
<S>                <C>           <C>           <C>                      <C>
   Apartments      $ 5,045       $ 3,639       3-40 yrs      S/L        $ 1,626
</TABLE>

See "Note A" of the  consolidated  financial  statements  included  in "Item 7 -
Financial  Statements"  for a  description  of  the  Partnership's  depreciation
policy.

Schedule of Rental Rate and Occupancy

Average annual rental rate and occupancy for 2001 and 2000 for the property:

                                  Average Annual                Average Annual
                                    Rental Rate                   Occupancy
                                    (per unit)
 Property                       2001            2000          2001         2000

 Lake Forest Apartments        $6,887          $6,897         91%           95%

The  Managing  General  Partner  attributes  the  decrease in  occupancy  to the
unfavorable economic conditions in the local market area.

As noted under "Item 1.  Description of Business",  the real estate  industry is
highly  competitive.  The Partnership's  property is subject to competition from
other residential  apartment complexes in the area. The Managing General Partner
believes that the property is adequately  insured.  The apartment complex leases
its units for lease terms of one year or less. No residential  tenant leases 10%
or more  of the  available  rental  space.  The  property  is in  good  physical
condition,  subject to normal  depreciation and  deterioration as is typical for
assets of this type and age.

Schedule of Real Estate Tax and Rate

Real estate taxes and rate in 2001 for the property were:

                                    2001             2001
                                  Billing            Rate
                               (in thousands)

Lake Forest Apartments              $39             10.32%

Capital Improvements

The Partnership completed  approximately $53,000 in capital expenditures at Lake
Forest Apartments during the year ended December 31, 2001,  consisting primarily
of  floor  covering  replacements,  air  conditioning  upgrades,  swimming  pool
improvements,  appliances and other enhancements. These improvements were funded
from operating cash flow.  The  Partnership is currently  evaluating the capital
improvement  needs of the property for the upcoming  year. The minimum amount to
be budgeted is expected to be $300 per unit or approximately $41,000. Additional
improvements may be considered and will depend on the physical  condition of the
property as well as cash flow generated by the property.

Item 3.     Legal Proceedings

In March 1998, several putative  unitholders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking  dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.   The  Managing  General  Partner  and  affiliated
defendants  intend  to  oppose  the  motion  and are  scheduled  to  file  their
opposition  brief on March 26, 2002. A hearing on the motion has been  scheduled
for April 29, 2002. The Court has set the matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing  General  Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.

The Managing  General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

Item 4.     Submission of Matters to a Vote of Security Holders

During the quarter ended December 31, 2001, no matter was submitted to a vote of
security  holders  of the  Registrant  through  the  solicitation  of proxies or
otherwise.
                                     PART II

Item 5.     Market for the Partnership's Common Equity and Related Security
            Holder Matters

The Partnership,  a publicly-held  limited partnership,  offered and sold 86,920
Limited Partnership Units (the "Units") during its offering period through March
6, 1985, and currently has 86,738 Units  outstanding and 2,006 Limited  Partners
of record.  Affiliates  of the Managing  General  Partner  owned 41,128 Units or
47.42% of the  outstanding  Units at December 31, 2001. No public trading market
has developed for the Units,  and it is not anticipated  that such a market will
develop in the future.

The following table sets forth the distributions made by the Partnership for the
years ended December 31, 2000 and 2001.  (See "Item 6.  Management's  Discussion
and Analysis or Plan of Operation" for further details):

                                                    Distribution
                                                                  Per Limited
                                       Aggregate                Partnership Unit
                                     (in thousands)
     01/01/00 - 12/31/00               $2,341 (1)                    $26.72
     01/01/01 - 12/31/01                  339 (2)                      3.87

(1)   Consists of  approximately  $1,205,000 of proceeds from the sale of Poplar
      Square  Shopping Center and  approximately  $1,136,000 of cash provided by
      operations.

(2)   Distributions were made from cash provided by operations.

Future cash  distributions  will depend on the levels of net cash generated from
operations,  the  availability of cash reserves,  the timing of financing and/or
sale of the property.  The  Partnership's  cash  available for  distribution  is
reviewed on a monthly basis. There can be no assurance that the Partnership will
generate sufficient funds from operations,  after required capital expenditures,
to permit  any  distributions  to its  partners  in the year 2002 or  subsequent
periods.  See "Item 2.  Description  of  Property  - Capital  Improvements"  for
information  relating to anticipated  capital  expenditures at the Partnership's
property.

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates  owned 41,128 limited  partnership  units
(the "Units") in the Partnership representing 47.42% of the outstanding Units at
December  31,  2001.  A number of these Units were  acquired  pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  which  would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the Managing General  Partner.  As a
result  of its  ownership  of  47.42% of the  outstanding  Units,  AIMCO is in a
position to influence all voting decisions with respect to the Registrant.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable to the interest of the Managing General Partner because of its
affiliation with the Managing General Partner.

Item 6.     Management's Discussion and Analysis or Plan of Operation

The  matters  discussed  in this Form  10-KSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained  in this Form 10-KSB and the other  filings  with the  Securities  and
Exchange Commission made by the Registrant from time to time. The discussions of
the Registrant's business and results of operations,  including  forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operations. Accordingly,
actual   results   could  differ   materially   from  those   projected  in  the
forward-looking  statements as a result of a number of factors,  including those
identified herein.

This  item  should  be read  in  conjunction  with  the  consolidated  financial
statements and other items contained elsewhere in this report.

Results of Operations

The   Registrant's  net  income  for  the  year  ended  December  31,  2001  was
approximately  $73,000 compared to net income of  approximately  $75,000 for the
year  ended  December  31,  2000.  The  decrease  in  net  income  is  primarily
attributable  to a decrease in total revenues offset by the recognition of a net
loss  from   discontinued   operations  during  2000.  Total  expenses  remained
relatively constant.

The  decrease  in  total  revenues  for the year  ended  December  31,  2001 was
attributable to a decrease in rental and other income.  Rental income  decreased
due to a decrease in occupancy at Lake Forest Apartments  combined with a slight
decrease in average  rental  rates.  The  decrease in other  income was due to a
decrease  in  interest  income  due to lower  average  cash  balances  and lower
interest rates for interest bearing accounts.

Included in general and  administrative  expenses at December 31, 2001 and 2000,
are costs of the services  provided by the Managing  General  Partner as allowed
under  the  Partnership   Agreement   associated  with  its  management  of  the
Partnership.  Also included are costs  associated  with the quarterly and annual
communications  with  investors  and  regulatory  agencies  and the annual audit
required by the Partnership Agreement.

Poplar Square was the only  commercial  property  owned by the  Partnership  and
represented one segment of the Partnership's operations. Due to the sale of this
property in 1999, the results of the commercial  segment have been shown as loss
from discontinued operations for 2000. The loss from discontinued operations was
approximately  $46,000 for 2000, and was related to the write off of receivables
for the segment.

As part of the ongoing  business plan of the  Partnership,  the Managing General
Partner  monitors the rental market  environment of its  investment  property to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of this
plan, the Managing  General Partner attempts to protect the Partnership from the
burden of  inflation-related  increases  in  expenses  by  increasing  rents and
maintaining a high overall  occupancy  level.  However,  due to changing  market
conditions,  which  can  result  in the use of  rental  concessions  and  rental
reductions needed to offset softening market  conditions,  there is no guarantee
that the Managing General Partner will be able to sustain such a plan.

Capital Resources and Liquidity

At  December  31,  2001,  the  Registrant  held  cash  and cash  equivalents  of
approximately $135,000, compared to approximately $206,000 at December 31, 2000,
a decrease  of  approximately  $71,000.  The  decrease  is due to  approximately
$339,000  and  $53,000  of cash  used in  financing  and  investing  activities,
respectively,  offset by  approximately  $321,000 of cash  provided by operating
activities.  Cash used in financing activities consisted of distributions to the
partners.  Cash used in investing activities consisted of property  improvements
and  replacements.  The  Registrant  invests  its  working  capital  reserves in
interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the Partnership's  property to adequately maintain the
physical  assets and other operating needs of the Partnership and to comply with
Federal, state, and local legal and regulatory requirements.  The Partnership is
currently  evaluating  the capital  improvement  needs of the  property  for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or  approximately  $41,000.  Additional  improvements may be considered and will
depend on the physical  condition of the  property as well as  anticipated  cash
flow generated by the property.  The  additional  capital  expenditures  will be
incurred only if cash is available from operations and Partnership  reserves. To
the  extent  that  such  budgeted   capital   improvements   are  completed  the
Registrant's distributable cash flow, if any, may be adversely affected at least
in the short term.

The  Registrant's  current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant.

The  Partnership  paid  cash  distributions  from  operations  of  approximately
$339,000  (approximately  $336,000 to the limited  partners or $3.87 per limited
partnership unit), during the year ended December 30, 2001. The Partnership paid
cash  distributions  from sale  proceeds  of Poplar  Square  Shopping  Center of
approximately  $1,205,000  (approximately  $1,193,000 to the limited partners or
$13.75  per  limited  partnership  unit) and from  operations  of  approximately
$1,136,000  (approximately  $1,125,000  to the  limited  partners  or $12.97 per
limited  partnership unit), during the year ended December 30, 2000. Future cash
distributions  will depend on the levels of net cash generated from  operations,
the  availability of cash reserves,  the timing of financing  and/or sale of the
property.  The  Partnership's  cash available for  distribution is reviewed on a
monthly  basis.  There can be no assurance  that the  Partnership  will generate
sufficient funds from operations, after required capital expenditures, to permit
distributions to its partners in the year 2002 or subsequent periods.

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates  owned 41,128 limited  partnership  units
(the "Units") in the Partnership representing 47.42% of the outstanding units at
December  31,  2001.  A number of these units were  acquired  pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would include without  limitation,  voting on certain
amendments  to the  Partnership  Agreement  and  voting to remove  the  Managing
General  Partner.  As a result of its  ownership  of  47.42% of the  outstanding
units,  AIMCO is in a position to  significantly  influence all voting decisions
with  respect to the  Registrant.  When  voting on  matters,  AIMCO would in all
likelihood  vote the Units it acquired in a manner  favorable to the interest of
the  Managing  General  Partner  because of its  affiliation  with the  Managing
General Partner.

Recent Accounting Pronouncements

In August 2001, the Financial  Accounting Standards Board issued SFAS No. 144,
"Accounting  for the  Impairment or Disposal of Long-Lived  Assets".  SFAS No.
144 provides  accounting  guidance for financial  accounting and reporting for
the impairment or disposal of long-lived assets.  SFAS No. 144 supersedes SFAS
No.  121,  "Accounting  for  the  Impairment  of  Long-Lived  Assets  and  for
Long-Lived  Assets to be Disposed  Of".  SFAS No. 144 is effective  for fiscal
years  beginning  after December 15, 2001. The Managing  General  Partner does
not anticipate  that its adoption will have a material effect on the financial
position or results of operations of the Partnership.

Item 7.     Financial Statements

ANGELES INCOME PROPERTIES, LTD. III

LIST OF FINANCIAL STATEMENTS


      Report of Ernst & Young LLP, Independent Auditors

      Consolidated Balance Sheet - December 31, 2001

      Consolidated  Statements of  Operations - Years ended  December 31, 2001
      and 2000

      Consolidated  Statements of Changes in Partners' (Deficit) Capital - Years
      ended December 31, 2001 and 2000

      Consolidated  Statements  of Cash Flows - Years ended  December 31, 2001
      and 2000

      Notes to Consolidated Financial Statements


<PAGE>


              Report of Ernst & Young LLP, Independent Auditors



The Partners
Angeles Income Properties, Ltd. III


We have audited the  accompanying  consolidated  balance sheet of Angeles Income
Properties,  Ltd.  III as of December  31,  2001,  and the related  consolidated
statements of operations, changes in partners' (deficit) capital, and cash flows
for each of the two years in the period ended December 31, 2001. These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made  by the  Partnership's  management,  as  well  as  evaluating  the  overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of Angeles Income
Properties,  Ltd. III at December 31, 2001, and the consolidated  results of its
operations  and its cash  flows  for each of the two years in the  period  ended
December 31, 2001, in conformity with accounting  principles  generally accepted
in the United States.


                                                          /s/ERNST & YOUNG LLP


Greenville, South Carolina
February 15, 2002


<PAGE>



                     ANGELES INCOME PROPERTIES, LTD. III

                           CONSOLIDATED BALANCE SHEET
                       (in thousands, except unit data)

                                December 31, 2001


Assets
   Cash and cash equivalents                                              $ 135
   Receivables and deposits                                                   4
   Other assets                                                               8
   Investment property (Note D):
      Land                                                     $ 657
      Buildings and related personal property                   4,388
                                                                5,045
      Less accumulated depreciation                            (3,639)    1,406
                                                                        $ 1,553

Liabilities and Partners' (Deficit) Capital
Liabilities
   Accounts payable                                                         $ 5
   Tenant security deposit liabilities                                       18
   Accrued property taxes                                                    34
   Other liabilities                                                         53
   Due to affiliates (Note C)                                                29
Partners' (Deficit) Capital
   General partners                                            $ (17)
   Limited partners (86,738 units issued and
      outstanding)                                              1,431     1,414
                                                                        $ 1,553

        See Accompanying Notes to Consolidated Financial Statements


<PAGE>


                     ANGELES INCOME PROPERTIES, LTD. III

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per unit data)
<TABLE>
<CAPTION>

                                                           Years Ended December 31,
                                                              2001         2000
Revenues:
<S>                                                           <C>          <C>
  Rental income                                               $ 825        $ 861
  Other income                                                    49           62
      Total revenues                                             874          923

Expenses:
  Operating                                                      353          330
  General and administrative                                     162          168
  Depreciation                                                   251          266
  Property taxes                                                  35           38
      Total expenses                                             801          802

Income from continuing operations                                 73          121
Loss from discontinued operations (Note E)                        --          (46)

Net income (Note B)                                           $ 73         $ 75

Net income allocated to general partners                       $ 1          $ 1

Net income allocated to limited partners                          72           74

                                                              $ 73         $ 75
Per limited partnership unit:
  Income from continuing operations                          $ 0.83       $ 1.38
  Loss from discontinued operations                              --        (0.53)

Net income per limited partnership unit                      $ 0.83       $ 0.85

Distributions per limited partnership unit                   $ 3.87       $ 26.72

        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                     ANGELES INCOME PROPERTIES, LTD. III

      CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
                       (in thousands, except unit data)


<TABLE>
<CAPTION>

                                         Limited
                                       Partnership    General     Limited
                                          Units       Partners   Partners     Total

<S>                                       <C>           <C>       <C>        <C>
Original capital contributions            86,920        $ 1       $43,460    $43,461

Partners' capital
   at December 31, 1999                   86,738        $ 7       $ 3,939    $ 3,946

Net income for the year ended
   December 31, 2000                          --            1          74         75

Distributions to partners                     --          (23)     (2,318)    (2,341)

Partners' (deficit) capital at
   December 31, 2000                      86,738          (15)      1,695      1,680

Net income for the year ended
   December 31, 2001                          --            1          72         73

Distributions to partners                     --           (3)       (336)      (339)

Partners' (deficit) capital at
   December 31, 2001                      86,738       $ (17)     $ 1,431    $ 1,414

        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                     ANGELES INCOME PROPERTIES, LTD. III

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
<TABLE>
<CAPTION>

                                                              Year Ended December 31,
                                                                  2001        2000
Cash flows from operating activities:
<S>                                                               <C>         <C>
  Net income                                                      $ 73        $ 75
  Adjustments to reconcile net income to net cash provided
   by operating activities:
     Depreciation                                                   251          266
     Bad debt                                                        15           62
     Change in accounts:
      Receivables and deposits                                       10           69
      Other assets                                                   --           (1)
      Accounts payable                                              (18)         (10)
      Tenant security deposit liabilities                            (5)           3
      Accrued property taxes                                         (4)          (1)
      Due to affiliates                                              (4)          33
      Other liabilities                                               3        (130)

          Net cash provided by operating activities                 321          366

Cash flows from investing activities:
  Property improvements and replacements                            (53)         (72)

          Net cash used in investing activities                     (53)         (72)

Cash flows from financing activities:
  Distributions to partners                                        (339)      (2,341)

          Net cash used in financing activities                    (339)      (2,341)

Net decrease in cash and cash equivalents                           (71)      (2,047)

Cash and cash equivalents at beginning of the year                  206        2,253

Cash and cash equivalents at end of year                         $ 135        $ 206

        See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                     ANGELES INCOME PROPERTIES, LTD. III

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2001


Note A - Organization and Significant Accounting Policies

Organization:   Angeles  Income  Properties,  Ltd.  III  (the  "Partnership"  or
"Registrant")  is a  California  limited  partnership  organized  in May 1983 to
acquire and operate  residential  and  commercial  real estate  properties.  The
Partnership's  managing  general partner is Angeles Realty  Corporation II ("ARC
II" or the "Managing General Partner"), an affiliate of Apartment Investment and
Management Company ("AIMCO") and previously a wholly-owned  subsidiary of MAE GP
Corporation  ("MAE GP").  Effective  February 25,  1998,  MAE GP was merged into
Insignia Properties Trust ("IPT"),  which was an affiliate of Insignia Financial
Group,  Inc.  ("Insignia").  Effective  February 26,  1999,  IPT was merged into
AIMCO.  Thus the Managing  General  Partner is now a wholly-owned  subsidiary of
AIMCO. The Elliott Accommodation Trust and the Elliott Family Partnership, Ltd.,
California limited partnerships,  were non-managing general partners.  Effective
December 31, 1997, the Elliott  Family  Partnership,  Ltd.  acquired the Elliott
Accommodation  Trust's general partner  interest in the Registrant.  On June 30,
2000,  the  Elliott  Family  Partnership  sold its  remaining  interest to AIMCO
Properties LP (the "Non-Managing General Partner"), a wholly owned subsidiary of
AIMCO.  The Managing  General Partner and the  Non-Managing  General Partner are
herein  collectively  referred to as the  "General  Partners".  The  Partnership
Agreement  provides that the  Partnership  is to terminate on December 31, 2038,
unless  terminated  prior to such date. As of December 31, 2001, the Partnership
operates one residential property in Mississippi.

Principles  of  Consolidation:  The  consolidated  financial  statements  of the
Partnership include its 99% limited  partnership  interests in Poplar Square AIP
III, L.P. and Poplar Square GP LP. Poplar Square GP LP is the general partner of
Poplar Square AIP III and ARC II is the general  partner of Poplar Square GP LP.
Both general  partners of the  consolidated  partnerships  may be removed by the
Registrant;  therefore,  the partnerships are controlled and consolidated by the
Partnership. All significant interpartnership balances have been eliminated.

Use of Estimates:  The  preparation of financial  statements in conformity  with
accounting   principles   generally  accepted  in  the  United  States  requires
management to make estimates and assumptions that affect the amounts reported in
the financial  statements and  accompanying  notes.  Actual results could differ
from those estimates.

Allocations of Profits, Gains, Losses, and Distributions: In accordance with the
Partnership  Agreement,   any  gain  from  the  sale  or  other  disposition  of
Partnership  assets will be allocated  first to the Managing  General Partner to
the extent of the amount of any Incentive  Interest (as defined  below) to which
the  Managing  General  Partner  is  entitled.  Any gain  remaining  after  said
allocation  will be  allocated to the general  partners and limited  partners in
proportion to their interests in the  Partnership;  provided that the gain shall
first be allocated to Partners with negative account balances,  in proportion to
such balances,  in an amount equal to the sum of such negative  capital  account
balances.  The  Partnership  will allocate  other profits and losses 0.5% to the
Managing General Partner,  0.5% to the Non-Managing  General Partner, and 99% to
the Limited Partners.

Except as discussed below, the Partnership will allocate distributions 1% to the
General Partners and 99% to the limited partners.

Upon  the  sale  or  other  disposition,  or  refinancing  of any  asset  of the
Partnership, the Distributable Net Proceeds shall be distributed as follows: (i)
First,  to the  Partners  in  proportion  to their  interest  until the  Limited
Partners have  received  proceeds  equal to their  Original  Capital  Investment
applicable  to the  property;  and (ii) Second,  to the Partners  until  Limited
Partners  have  received  distributions  from  all  sources  equal  to  their 6%
Cumulative  Distribution,  (iii) Third, to the Managing General Partner until it
has  received  its  Brokerage  Compensation;  (iv)  Fourth,  to the  Partners in
proportion  to  their  interests  until  the  Limited   Partners  have  received
distributions   from  all  sources  equal  to  their  additional  2%  Cumulative
Distribution;  and (v)  Thereafter,  85% to the Partners in  proportion to their
interests and 15% ("Incentive Interest") to the Managing General Partner.

Depreciation:  Depreciation  is  provided by the  straight-line  method over the
estimated lives of the apartment  property and related  personal  property.  For
Federal income tax purposes,  the  accelerated  cost recovery method is used for
real property over 18 years for additions after March 15, 1984 and before May 9,
1985, and 19 years for additions  after May 8, 1985, and before January 1, 1987.
As a result of the Tax Reform Act of 1986,  for  additions  after  December  31,
1986, the modified  accelerated cost recovery method is used for depreciation of
(1) real property over 27 1/2 years and (2) personal  property  additions over 5
years.

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in
banks.  At certain times,  the amount of cash deposited at a bank may exceed the
limit on insured  deposits.  Cash balances  included  approximately  $127,000 at
December 31, 2001 that are  maintained  by an affiliated  management  company on
behalf of affiliated entities in cash concentration accounts.

Investment  Property:  Investment property consists of one apartment complex and
is stated at cost. Acquisition fees are capitalized as a cost of real estate. In
accordance with Statement of Financial  Accounting  Standards  ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", the Partnership  records impairment losses on long-lived assets
used in operations when events and circumstances  indicate that the assets might
be impaired and the  undiscounted  cash flows estimated to be generated by those
assets are less than the carrying  amounts of those assets.  No adjustments  for
impairment  of value were  necessary  for the years ended  December  31, 2001 or
2000. See "Recent Accounting Pronouncements" below.

Tenant Security  Deposits:  The Partnership  requires security deposits from all
apartment  lessees for the  duration of the lease.  The  security  deposits  are
refunded  when the tenant  vacates  the  apartment  provided  the tenant has not
damaged the space and is current on rental payments.

Leases: The Partnership  generally leases apartment units for twelve month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the Managing  General  Partner's  policy is to offer rental  concessions  during
particularly  slow  months or in  response  to heavy  competition  from  similar
complexes  in the  area.  Concessions  are  charged  against  rental  income  as
incurred.

Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value
of  Financial  Instruments",  as amended  by SFAS No.  119,  "Disclosures  about
Derivative  Financial  Instruments  and Fair  Value of  Financial  Instruments",
requires  disclosure  of fair value  information  about  financial  instruments,
whether or not recognized in the balance  sheet,  for which it is practicable to
estimate  fair  value.  Fair value is defined in the SFAS as the amount at which
the  instruments  could be exchanged in a current  transaction  between  willing
parties,  other than in a forced or liquidation  sale. The Partnership  believes
that the carrying amounts of its financial  instruments  approximate  their fair
values due to the short term maturity of these instruments.

Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related  Information"  established  standards  for the way that public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports.  It also established  standards
for related disclosures about products and services, geographic areas, and major
customers.  As defined in SFAS No. 131, the  Partnership has only one reportable
segment.  The Managing General Partner believes that  segment-based  disclosures
will  not  result  in a  more  meaningful  presentation  than  the  consolidated
financial statements as currently presented.

Advertising:  The  Partnership  expenses  the cost of  advertising  as incurred.
Advertising costs of approximately $23,000 for both the years ended December 31,
2001 and 2000, respectively, were charged to operating expense.

Recent Accounting Pronouncements

In August 2001, the Financial  Accounting Standards Board issued SFAS No. 144,
"Accounting  for the  Impairment or Disposal of Long-Lived  Assets".  SFAS No.
144 provides  accounting  guidance for financial  accounting and reporting for
the impairment or disposal of long-lived assets.  SFAS No. 144 supersedes SFAS
No.  121,  "Accounting  for  the  Impairment  of  Long-Lived  Assets  and  for
Long-Lived  Assets to be Disposed  Of".  SFAS No. 144 is effective  for fiscal
years  beginning  after December 15, 2001. The Managing  General  Partner does
not anticipate  that its adoption will have a material effect on the financial
position or results of operations of the Partnership.

Note B - Income Taxes

The Partnership has received a ruling from the Internal  Revenue Service that it
will  be  classified  as  a  partnership   for  Federal   income  tax  purposes.
Accordingly, taxable income or loss of the Partnership is reported in the income
tax returns of its partners.  Accordingly, no provision for income taxes is made
in the consolidated financial statements of the Partnership.

The  following is a  reconciliation  of reported net income and Federal  taxable
income (loss) (in thousands, except per unit data):

                                          2001          2000

Net income as reported                  $    73         $ 75
Add (deduct):
  Depreciation differences                   97           120
  Gain on sale of Poplar Square              --           (38)
  Other                                     (11)          (18)
  Northtown Mall JV receivable
    write off                                --          (587)

Federal taxable income (loss)           $   159        $ (448)

Federal taxable income (loss) per
  limited partnership unit              $  1.81       $ (5.18)

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets (in thousands):

Net assets as reported                $ 1,414
Land and buildings                        (61)
Accumulated depreciation                  281
Syndication and distribution costs      5,807
Other                                      82

Net assets - Federal tax basis        $ 7,523

Note C - Transactions with Affiliated Parties

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The  Partnership  Agreement  provides  (i) for certain
payments to affiliates for services and (ii)  reimbursement  of certain expenses
incurred by affiliates on behalf of the Partnership.

The following  payments were made to the Managing General Partner and affiliates
during the year ended December 31, 2001 and 2000:

                                                              2001       2000
                                                              (in thousands)
   Property management fees (included in operating
     expenses)                                                $ 48       $ 46
   Reimbursement for services of affiliates (included
     in general and administrative expenses and
     investment property)                                       81         56
   Partnership management fees (included in general and
     administrative expense)                                    29         30

Affiliates of the Managing  General  Partner are entitled to receive 5% of gross
receipts from the Registrant's  property as compensation for providing  property
management  services.  The  Registrant  paid  to such  affiliates  approximately
$48,000  and  $46,000  for  the  years  ended   December   31,  2001  and  2000,
respectively.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting  to  approximately  $81,000 and
$56,000 for the years ended December 31, 2001 and 2000, respectively.

The Partnership Agreement provides for a fee equal to 10% of "net cash flow from
operations",  as defined in the Partnership Agreement to be paid to the Managing
General Partner for executive and administrative  management services.  This fee
is calculated and accrued  quarterly.  At December 31, 2001, the Partnership had
accrued  approximately  $29,000  which is included in due to  affiliates  on the
accompanying consolidated balance sheet.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated  with the Managing General Partner.  During the year ended December
31, 2001, the Partnership paid AIMCO and its affiliates approximately $7,000 for
insurance coverage and fees associated with policy claims administration.

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates  owned 41,128 limited  partnership  units
(the "Units") in the Partnership representing 47.42% of the outstanding Units at
December  31,  2001.  A number of these Units were  acquired  pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  which  would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the Managing General  Partner.  As a
result  of its  ownership  of  47.42% of the  outstanding  Units,  AIMCO is in a
position to influence all such voting  decisions with respect to the Registrant.
When voting on matters, AIMCO would in all likelihood vote the Units it acquired
in a manner favorable to the interest of the Managing General Partner because of
its affiliation with the Managing General Partner.

Note D - Real Estate and Accumulated Depreciation


                                               Initial Cost
                                              To Partnership
                                              (in thousands)

                                                      Buildings        Cost
                                                     and Related   Capitalized
                                                      Personal    Subsequent to
     Description         Encumbrances       Land      Property     Acquisition
                        (in thousands)                            (in thousands)

Lake Forest Apts.            $ --          $ 657       $3,160         $1,228

<TABLE>
<CAPTION>

                          Gross Amount At Which Carried
                              At December 31, 2001
                              (in thousands)

                               Buildings
                              And Related
                                Personal               Accumulated      Date     Depreciable
    Description        Land     Property     Total     Depreciation   Acquired   Life-Years

<S>                   <C>        <C>         <C>          <C>         <C>  <C>       <C>
Lake Forest Apts.     $ 657      $4,388      $5,045       $3,639      6/27/84        40
</TABLE>

The depreciable  lives included above are for the buildings and components.  The
depreciable lives for related personal property are for 3 to 10 years.

Reconciliation of "Investment Properties and Accumulated Depreciation":

                                                 Years Ended December 31,
                                                   2001           2000
                                                      (in thousands)
Investment Properties
Balance at beginning of year                      $ 4,992        $ 4,920
  Property improvements and replacements               53             72
Balance at end of year                            $ 5,045        $ 4,992

Accumulated Depreciation
Balance at beginning of year                      $ 3,388        $ 3,122
  Additions charged to expense                        251            266
Balance at end of year                            $ 3,639        $ 3,388

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  2001  and  2000,  is  approximately  $4,984,000  and  $4,931,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December  31, 2001 and 2000,  is  approximately  $3,358,000  and  $3,204,000,
respectively.

Note E - Discontinued Operations and Sale of Discontinued Operations

On December 30, 1999, Poplar Square Shopping Center located in Medford,  Oregon,
was sold to an unaffiliated third party for $5,215,000.

Poplar Square was the only  commercial  property  owned by the  Partnership  and
represented one segment of the Partnership's operations. Due to the sale of this
property,  the results of the  commercial  segment  have been shown as loss from
discontinued  operations  for 2000.  Losses from  discontinued  operations  were
approximately  $46,000 for 2000 and were related to the write off of receivables
for the segment.

Note F - Distributions

The  Partnership  declared  and  paid  cash  distributions  from  operations  of
approximately $339,000  (approximately $336,000 to the limited partners or $3.87
per limited  partnership  unit) during the year ended December 31, 2001.  During
the year ended December 31, 2000, the Partnership paid a cash  distribution from
the net sale proceeds of Poplar Square Shopping  Center,  which sold in December
1999,  of  approximately  $1,205,000  (approximately  $1,193,000  to the limited
partners  or  $13.75  per  limited  partnership  unit)  and from  operations  of
approximately  $1,136,000  (approximately  $1,125,000 to the limited partners or
$12.97 per limited partnership unit).

Note G - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking  dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.   The  Managing  General  Partner  and  affiliated
defendants  intend  to  oppose  the  motion  and are  scheduled  to  file  their
opposition  brief on March 26, 2002. A hearing on the motion has been  scheduled
for April 29, 2002. The Court has set the matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing  General  Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.

The Managing  General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

Item 8.     Changes in and  Disagreements  with  Accountant on Accounting  and
            Financial Disclosures

            None.


                                    PART III

Item 9.     Directors,  Executive  Officers,  Promoters  and Control  Persons;
            Compliance with Section 16(a) of the Exchange Act

Angeles Income  Properties,  Ltd. III (the "Partnership" or "Registrant") has no
officers  or  directors.   The  Managing   General  Partner  is  Angeles  Realty
Corporation  II  ("ARC  II"  or  "Managing  General   Partner"),   which  was  a
wholly-owned subsidiary of MAE GP Corporation ("MAE GP"). Effective February 25,
1998,  MAE GP was merged  into  Insignia  Properties  Trust  ("IPT").  Effective
February 26,  2000,  IPT was merged into  Apartment  Investment  and  Management
Company  ("AIMCO").  Thus,  the Managing  General  Partner is now a wholly-owned
subsidiary of AIMCO.

The names of the director and  executive  officers of ARC II, their ages and the
nature of all positions with ARC II presently held are as follows:

Name                        Age    Position

Patrick J. Foye              44    Executive Vice President and Director
Martha L. Long               42    Senior Vice President and Controller

Patrick  J.  Foye  has been  Executive  Vice  President  and  Director  of the
Managing  General  Partner  since  October  1,  1998.  Mr.  Foye has served as
Executive  Vice  President  of AIMCO since May 1998.  Prior to joining  AIMCO,
Mr.  Foye was a partner in the law firm of  Skadden,  Arps,  Slate,  Meagher &
Flom LLP from 1989 to 1998 and was  Managing  Partner of the firm's  Brussels,
Budapest and Moscow  offices from 1992 through  1994.  Mr. Foye is also Deputy
Chairman of the Long Island Power  Authority and serves as a member of the New
York State  Privatization  Council.  He received a B.A.  from Fordham  College
and a J.D. from Fordham University Law School.

Martha L. Long has been Senior Vice  President  and  Controller  of the Managing
General  Partner since October 1998 as a result of the  acquisition  of Insignia
Financial  Group,  Inc. As of February 2001, Ms. Long was also appointed head of
the service  business for AIMCO.  From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997,  retaining that title until October 1998.  From 1988
to June 1994,  Ms. Long was Senior Vice  President and  Controller for The First
Savings Bank, FSB in Greenville, South Carolina.

One or more of the above persons are also directors and/or officers of a general
partner (or general partner of a general partner) of limited  partnerships which
either have a class of  securities  registered  pursuant to Section 12(g) of the
Securities Exchange Act of 1934, or are subject to the reporting requirements of
Section  15(d) of such Act.  Further,  one or more of the above persons are also
directors and/or officers of Apartment Investment and Management Company and the
general  partner  of  AIMCO  Properties,  L.P.,  entities  that  have a class of
securities  registered  pursuant to Section 12(g) of the Securities Exchange Act
of 1934, or are subject to the reporting  requirements of Section 15 (d) of such
Act.

The executive  officers and director of the Managing General Partner fulfill the
obligations  of the Audit  Committee  and  oversee the  Partnership's  financial
reporting process on behalf of the Managing General Partner.  Management has the
primary  responsibility  for the financial  statements and the reporting process
including  the  systems  of  internal  controls.  In  fulfilling  its  oversight
responsibilities,  the executive  officers and director of the Managing  General
Partner reviewed the audited  financial  statements with management  including a
discussion  of the  quality,  not  just  the  acceptability,  of the  accounting
principles,  the  reasonableness  of significant  judgments,  and the clarity of
disclosures in the financial statements.

The executive  officers and director of the Managing  General  Partner  reviewed
with the independent auditors,  who are responsible for expressing an opinion on
the conformity of those audited financial statements with accounting  principles
generally accepted in the United States,  their judgments as to the quality, not
just the  acceptability,  of the  Partnership's  accounting  principles and such
other  matters as are required to be discussed  with the Audit  Committee or its
equivalent under auditing standards  generally accepted in the United States. In
addition,  the  Partnership  has  discussed  with the  independent  auditors the
auditors' independence from management and the Partnership including the matters
in the written  disclosures  required by the  Independence  Standards  Board and
considered  the   compatibility   of  non-audit   services  with  the  auditors'
independence.

The executive  officers and director of the Managing  General Partner  discussed
with the  Partnership's  independent  auditors  the overall  scope and plans for
their audit. In reliance on the reviews and discussions  referred to above,  the
executive officers and director of the Managing General Partner has approved the
inclusion of the audited  financial  statements  in the Form 10-KSB for the year
ended December 31, 2001 for filing with the Securities and Exchange Commission.

The Managing  General Partner has  reappointed  Ernst & Young LLP as independent
auditors to audit the financial  statements of the  Partnership  for the current
fiscal year. Fees for the last fiscal year were audit services of  approximately
$31,000  and  non-audit  services  (principally  tax-related)  of  approximately
$16,000.

Item 10.    Executive Compensation

No direct form of compensation  or  remuneration  was paid by the Partnership to
any officer or director of the Managing General Partner.

Item 11.    Security Ownership of Certain Beneficial Owners and Management

Except as noted below, no person or entity was known by the Registrant to be the
beneficial  owner  of  more  than 5% of the  Limited  Partnership  Units  of the
Registrant as of December 31, 2001.

Entity                                  Number of Units      Percentage
AIMCO Properties LLP
  (an affiliate of AIMCO)                    29,653            34.19%
Cooper River Properties, LLC
  (an affiliate of AIMCO)                    11,470            13.23%
Insignia Properties LP
  (an affiliate of AIMCO)                         5               *

*  Less than 0.01%

Cooper River Properties LLC and Insignia Properties LP are indirectly ultimately
owned by AIMCO. Their business addresses are 55 Beattie Place, Greenville, South
Carolina 29602.

AIMCO Properties LP is indirectly  ultimately  controlled by AIMCO. Its business
address is 2001 South Colorado Boulevard, Denver, Colorado 80222.

No director  or officer of the  Managing  General  Partner  owns any Units.  The
Managing  General  Partner  owns  100  Units  as  required  by the  terms of the
Partnership Agreement governing the Partnership.

Item 12.    Certain Relationships and Related Transactions

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The  Partnership  Agreement  provides  (i) for certain
payments to affiliates for services and (ii)  reimbursement  of certain expenses
incurred by affiliates on behalf of the Partnership.

The following  payments were made to the Managing General Partner and affiliates
during the year ended December 31, 2001 and 2000:

                                                              2001       2000
                                                              (in thousands)

   Property management fees                                   $ 48       $ 46
   Reimbursement for services of affiliates                     81         56
   Partnership management fees                                  29         30

Affiliates of the Managing  General  Partner are entitled to receive 5% of gross
receipts from the Registrant's  property as compensation for providing  property
management  services.  The  Registrant  paid  to such  affiliates  approximately
$48,000  and  $46,000  for  the  years  ended   December   31,  2001  and  2000,
respectively.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting  to  approximately  $81,000 and
$56,000 for the years ended December 31, 2001 and 2000, respectively.

The Partnership Agreement provides for a fee equal to 10% of "net cash flow from
operations",  as defined in the Partnership Agreement to be paid to the Managing
General Partner for executive and administrative  management services.  This fee
is calculated and accrued  quarterly.  At December 31, 2001, the Partnership had
accrued  approximately  $29,000  which is included in due to  affiliates  on the
accompanying consolidated balance sheet.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated  with the Managing General Partner.  During the year ended December
31, 2001, the Partnership paid AIMCO and its affiliates approximately $7,000 for
insurance coverage and fees associated with policy claims administration.

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates  owned 41,128 limited  partnership  units
(the "Units") in the Partnership representing 47.42% of the outstanding Units at
December  31,  2001.  A number of these Units were  acquired  pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  which  would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the Managing General  Partner.  As a
result  of its  ownership  of  47.42% of the  outstanding  Units,  AIMCO is in a
position to influence all such voting  decisions with respect to the Registrant.
When voting on matters, AIMCO would in all likelihood vote the Units it acquired
in a manner favorable to the interest of the Managing General Partner because of
its affiliation with the Managing General Partner.


                                     PART IV


Item 13.    Exhibits and Reports on Form 8-K

      (a)   Exhibits:

            None.

      (b)   Reports on Form 8-K filed in the fourth quarter of year 2001:

            None.


                                   SIGNATURES



In accordance  with Section 13 or 15(d) of the Exchange Act, the  Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                    ANGELES INCOME PROPERTIES, LTD. III
                                    (A California Limited Partnership)
                                    (Registrant)


                                    By:   Angeles Realty Corporation II
                                          Managing General Partner


                                    By:   /s/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President


                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President and
                                          Controller


                                    Date: March 22, 2002


In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the Registrant and in the capacities on the date
indicated.

/s/Patrick J. Foye            Executive Vice President      Date:March 22, 2002
Patrick J. Foye               and Director


/s/Martha L. Long             Senior Vice President         Date:March 22, 2002
Martha L. Long                and Controller


<PAGE>


                     ANGELES INCOME PROPERTIES, LTD. III

                                  EXHIBIT INDEX


Exhibit Number    Description of Exhibit

       3.1        Amended  Certificate and Agreement of the Limited  Partnership
                  file in Form S-11 dated June 2,  1983,  which is  incorporated
                  herein by reference.

      10.1        Agreement of Purchase  and of Real  Property  with  Exhibits -
                  Lake Forest  Apartments  filed in Form 8K dated June 28, 1984,
                  which is incorporated herein by reference

      10.3        Agreement of Purchase and Sale of Real  Property with Exhibits
                  - Poplar Square Shopping Center filed in Form 8K dated May 15,
                  1985, incorporated herein by reference.

      10.4        Agreement of Purchase and Sale of Real  Property with Exhibits
                  - Northtown  Mall filed in Form 8K dated July 15, 1985,  which
                  is incorporated herein by reference

      10.5        General  Partnership  Agreement of Northtown Partners filed in
                  Form 10-K dated October 31, 1986, which is incorporated herein
                  by reference.

      10.11       Promissory  Note -  Northtown  Mall  filed in Form 10-K  dated
                  December 31, 1990, which is incorporated herein by reference.

      10.12       Stock Purchase  Agreement  dated November 24, 1992 showing the
                  purchase of 100% of the  outstanding  stock of Angeles  Realty
                  Corporation II, a subsidiary of MAE GP  Corporation,  filed in
                  Form 8-K dated December 31, 1993, which is incorporated herein
                  by reference.

      10.15       Promissory  Note - dated  October 31, 1996,  between  Poplar
                  Square AIP III. L.P., and Union Capital Investments, LLC.

      10.16       Purchase and Sale Contract between Poplar Square AIP III, L.P.
                  and SB Management  Corporation  dated August 12, 2000 filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      10.17       Amendment to Purchase and Sale Contract  between Poplar Square
                  AIP III, L.P. and SB Management  Corporation filed in Form 8-K
                  dated  December  30,  1999,  which is  incorporated  herein by
                  reference.

      10.18       Second  Amendment to Purchase and Sale Contract between Poplar
                  Square AIP III,  L.P. and SB Management  Corporation  filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      10.19       Third  Amendment to Purchase and Sale Contract  between Poplar
                  Square AIP III,  L.P. and SB Management  Corporation  filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      10.20       Fourth  Amendment to Purchase and Sale Contract between Poplar
                  Square AIP III,  L.P. and SB Management  Corporation  filed in
                  Form 8-K dated December 30, 1999, which is incorporated herein
                  by reference.

      16.1        Letter  from  Registrant's  former  accountant  regarding  its
                  concurrence  with the  statements  made by the  Registrant  is
                  incorporated  by reference to the Exhibit  filed with Form 8-K
                  dated September 1, 1993.